While the yield curve has steepened the last two days, the recent relationship with stocks is holding up as the almost unprecedented negative correlation is confirmed by weakness in stocks…

And that has driven the correlation between stocks and the yield curve to its most negative since October 2008…

This short-term negative correlation means simply that the stock market’s view of inflation and growth the most ‘positive’ relative to the extreme ‘negative’ view of future inflation and growth of the bond market.

This broad death cross of rationality has existed for a few years, but the last few months have seen a regime change (since The Fed started to normalize its balance sheet)…

The tricky bit is that the last time the bond and stock market disagreed this much, bonds were right and the stock market tumbled over 35% in the next few months…

For now, the overwhelming speculative positioning is betting that bonds are wrong and stocks are right…

And all of this as we note that the odds of 3 or more Fed rate-hikes for the rest of the year just overtook the odds of 2 more hikes…