Most market players would love to turn back the clock just three months, to September 21st, when the S&P 500 and 10-year Treasury yield recorded relatively rare “joint” 52-week closing highs (on a weekly closing basis). The popular claim at the time was that “interest rates were rising for the right reasons,” and were still too low to threaten either the stock market or U.S. economic expansion.

Chart 1

We noted in October that simultaneous one-year highs in stocks and yields have historically been followed by stock market returns that are essentially flat, on average, over a one-to-six-month horizon. While this year’s yield rise may in fact have occurred for the “right reasons” (whatever those are), the stock market’s short-term response has been the worst of all signals dating back to the mid-1950s.

Chart 2