BIG NUMBER
-.81
(Click the chart below to view and download)
WHAT IT IS 
The correlation of daily returns between the S&P 500 (SPX) and bonds (ICE U.S. Treasury 7-10 Year Index). A negative correlation indicates that they are moving in opposite directions.
MARKET/POLICY NOTES
Tensions between the U.S. and China eased last week. Both sides agreed to new trade talks in early October, and the situation in Hong Kong improved slightly. The Chinese central bank eased monetary policy, kicking off a busy few weeks for global central banks.
HOW MARKETS REACTED
Stocks had a strong week, with the S&P 500 (SPX) up 1.8%. Emerging markets returned 2.4% (MXEF), followed by international, climbing 2.2% (MXEA). Bond yields rose, and the dollar was weaker.
WHAT THIS MEANS
Stocks and bonds decoupled during August, parting ways when the U.S. announced more tariffs on China, and China responded in kind. Investors flocked to treasuries as a safe haven as equities sold off, a departure from the risk on/risk off pattern that has defined markets for most of the year.
WHAT TO WATCH
Consumer strength remains the key to growth. Retail sales data on Friday will give an update on that part of the economy. The European Central Bank meeting on Thursday, where policy easing is expected, will be an important precursor to the Federal Reserve meeting the following week.
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