A rising stock market, rising Treasury yields and a firming dollar seems like an abnormal trading relationship post-financial crisis, but the recent correlation between these markets may be signaling more confidence in the U.S. and more 'normal' times ahead.
The question is whether this trend will last, while for so many years the markets moved in lock step â?? either "risk on" or "risk off." When the markets were risk on, the dollar weakened and riskier assets rose, such as commodities and stocks. The dollar would strengthen in "risk off" times, when fear gripped markets, and Treasury yields would go lower as investors rushed into bonds. But now it is the yen wilting, and commodities are going lower, not higher, as U.S. stocks soar to record highs.
