It's a little odd.
Falling yields have been associated with big stock market pull backs in the recent past, but not this year . . . so far.
Between December 2007 and December 2008, the 10-year Treasury yield fell over 40% while the S&P500 tanked 37% in calendar 2008. Similarly in calendar 2011 the S&P500 barely eeked out a total return of 2% as the 10-year yield also fell 40%.
Conversely, rising yields have been associated with healthy stock market gains. In 2013 yield on the 10-year rose almost 69% as the S&P500 posted a phenomenal total return in excess of 32%, the fourth best return since 1970. Similarly yield rose 50% between late 2008 and late 2009 as the S&P500 recovered 26% in 2009.
Steady yields in 2006, 2007, 2010 and 2012 relative to the prior year are associated with S&P500 gains of between 5.5% and 16%. That 5.5% year in 2007 is associated with a yield drop of 10%.
The current yield of 2.07% would need to fall another .33 to represent a 40% drop in yield year over year associated with the big stock market pull backs of the recent past which everyone seems to have been waiting for but not getting.
