Key Points
- The Nasdaq 100 (US100) and the US 10 year Treasury yield have moved in the same direction for most of 2026, both climbing from their spring lows to a joint peak in early October and both rolling over since. With the US100 at 29,585 and the 10 year at 5.085%, the index is down about 5.7% from its 31,360 high while the yield is down roughly 27 basis points from its 5.36% peak.
- A positive correlation means the market has been reading higher yields as a sign of strong growth rather than a threat. Wednesday’s hot CPI briefly put the textbook rate fear back in charge, but Thursday’s move, with yields falling alongside stocks, points to a growth scare instead. The implication for VIP members: which of the two leads from here decides whether lower yields are a relief or a warning.
The Relationship Most Traders Expect
The textbook says rising yields are bad for stocks. Higher yields raise the discount rate applied to future earnings, make borrowing more expensive and offer investors a competitive risk free return, which hits long duration growth stocks like the Nasdaq 100 hardest. That is the framework most traders carry into every CPI day.
The chart below shows that for most of this year the market did not follow it. The index and the yield rose together, which is what tends to happen when yields climb because growth and earnings expectations are climbing too. A positive correlation like that is a regime rather than a mistake, and this week suggests the regime may be changing.
The Overlay
Chart: US100 (candlesticks) vs US 10Y Treasury Yield (blue line), Daily timeframe (TradingView)
Nasdaq 100 (US100) versus US 10 year Treasury yield chart, late October 2025 to 15 October 2026, daily timeframe: the index and the yield both rose from spring lows to a joint peak in early October, with the US100 near 31,360 and the yield near 5.36%, and have both fallen since, to 29,585 and 5.085%.
Six Months Up Together, Now Down Together
Start at the left of the chart. The yield bottomed below 4.0% in March and the US100 bottomed below 23,000 in early April, and from there both turned up. The index rallied by more than a third into a high near 31,360 on 6 October, while the yield climbed to a peak near 5.36% the following day. Through that whole stretch, higher yields did not stop the rally, and for much of it they appeared to be feeding it.
The first real crack came this week. Wednesday’s CPI beat expectations, with headline at 3.7% against 3.6% and core at 2.6% against 2.5%, and the 10 year spiked from 5.19% to a high near 5.33% within half an hour. That was the textbook reaction: yields up, tech down. The Nasdaq Composite fell 1.9%, with debt heavy AI names such as CoreWeave and Oracle among the hardest hit, and Saxo’s Charu Chanana described it as a repricing of the cost of capital.
Thursday broke the pattern. The 10 year fell back to about 5.09%, yet stocks kept falling: the Nikkei dropped 4.8%, South Korea’s Kospi fell 8%, and the US100 is down another 1.1% at 29,585. TD Securities’ Prashant Newnaha called the bond rally counterintuitive and said the AI slump looks like a repricing of growth expectations lower. In other words, yields are no longer pushing stocks down; falling stocks are pulling yields down as money moves into Treasuries for safety. The two lines point the same way on the chart, but the message is very different.
What This Means for Your Trading
The practical takeaway is that the sign of the stock and yield correlation is itself information. When both rise together, the market is reading growth. When yields rise and stocks fall, as on Wednesday, it is reading inflation and rate risk. And when both fall together, as now, it is reading a growth scare, which is a different problem from a rate scare and is not fixed by lower yields alone. Traders who assumed falling yields would automatically help tech on Thursday were caught offside.
Going forward, the key question is which side leads. Yields easing while the US100 stabilises would suggest the rate fear has passed and the AI sell off is running out of steam, while yields falling further as the index keeps dropping would mean the growth scare is deepening. A rebound in yields toward the 5.33% post CPI high without a recovery in stocks would bring the original rate argument back. Today’s PPI and retail sales, Friday’s Warsh appearance in Bangkok and the Fed’s 27 to 28 October meeting, where markets price roughly a 75% chance of a hold, are the next tests.
Risk Warning: Trading financial instruments, particularly those involving leverage, involves a substantial degree of risk and is not appropriate for all investors. The value of your investments can rise or fall sharply, and it is possible to lose the entirety of your invested capital. Do not trade with funds you cannot afford to lose. Nothing in this site should be read or construed as constituting advice on the part of Taurex or any of its affiliates, directors, officers or employees.
