Treasury Yields Track Nasdaq More Than Oil

Charts from BCA Research, highlighted by Bitwise’s André Dragosch, show the correlation between Treasury yields and the Nasdaq has overtaken their relationship with oil. That is unusual. For much of the past several years, investors have treated oil as the cleaner signal for where yields might go because crude feeds directly into inflation expectations and the Federal Reserve’s reaction function. A stronger Nasdaq, by contrast, often reflects easier financial conditions, stronger growth prospects and appetite for longer-duration assets. When yields start tracking the Nasdaq more than oil, it implies the market is linking bond pricing to equity valuations and growth duration rather than to commodity-led inflation pressure.

That reading is consistent with recent price action across risk assets. The Nasdaq 100-tracking QQQ has fallen sharply, closing at 647.05 on Nov. 5 after a 128.8 million-share session, with its relative strength index down to 30.3 — near oversold territory — and the stock trading well below its 50-day moving average of 722.03. The move comes as TLT, the long-duration Treasury ETF, held around 81.93, with conventional technical indicators showing a steadier tone: RSI at 64.0 and the fund above its 50-day moving average. That divergence hints that investors have been rotating toward duration as tech volatility rises, a pattern that fits a more growth-sensitive bond market.

The macro backdrop reinforces the message. The 10-year Treasury yield was around 4.891%, while the 2-year sat near 0.348% in the supplied data, with the Fed funds rate forecast at 3.89%. Whatever the exact path of policy, the market’s reaction function appears less dominated by inflation from energy and more by growth risks that could ease the pressure for further tightening. If AI-linked earnings expectations weaken, that can compress equity multiples, tighten financial conditions and eventually push yields lower without requiring a recessionary shock from commodities or a spike in oil.

The risk case is that this is a fragile equilibrium. Oil has not disappeared as a macro driver, and any renewed energy shock would still threaten to reprice inflation expectations. But for now the stronger signal is that Treasury traders are treating the Nasdaq’s fortunes as a more important guide than crude. That matters for investors because it changes what moves rates: not just inflation prints and OPEC headlines, but whether the AI trade can continue to justify high valuations and keep growth expectations intact.

For equity investors, the implication is straightforward: Treasury yields may be reacting less to the old inflation cycle and more to the market’s confidence in the tech-led expansion. If that confidence erodes further, lower yields could cushion duration assets, while cyclicals and energy may lose their usual inflation hedge premium. If AI enthusiasm stabilizes, yields may regain some support — but the market has clearly shifted toward a growth-first, not oil-first, rates regime.