Since six months the correlation between 10yr Treasury bond yields (purple, left hand scale) and the US stock market (right hand scale) had been perfectly positive. Fears about European defaults and thereby lower world growth led to falling stock prices, which led to rising bond prices (or falling yields). Less growth = less inflation = good for bonds. So far so good. Since June 9 however there has been a “decoupling” of the stock market from the 10yr yield (triple witching hour related?). So either bond yields would have to move up or stocks move lower. Usually bond investors are a tad smarter than equity investors (click on chart for larger picture).

Source: Lighthouse Investment Management