The correlation between technology stocks and interest rates is pretty simple. As interest rates fall, tech stocks rally. As interest rates rise, tech stocks decline.
It’s not perfect, but today’s chart shows that the correlation has worked well… until recently!
Note that the blue line is the TLT (bonds etf) and it goes down as interest rates rise (same thing that we usually see tech stocks do).
You can see that there has been a high correlation the past three years. But then we had some regional bank problems and a huge divergence formed over the past several months.
Can tech stocks continue to be resistant to higher interest rates? Are they starting to crack? Or will interest rates fall sharply allowing TLT to rise quickly and close the gap with tech stocks?
Will it be interest rates or technology stocks? Stay tuned!
$TLT 20+ Year Treasury Bond ETF versus $QQQ Nasdaq 100 Chart
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