Bloomberg Surveillance · Wednesday, September 2, 2026
Sebastian Page of T. Rowe Price highlighted a strong correlation between oil prices and the 10-year Treasury yield over the past 40 years, suggesting that oil price and inflation are significant drivers of rising long-term rates. He noted that market participants may also be factoring in potential deficits related to ongoing conflicts.
“But I've been looking into this, how the 10-year is trading relative to oil prices. I calculated the rolling 30-day correlation between changes in the 10-year and changes in oil prices. And I went back 40 years. And guess what? It's at 80%. plus 80% correlation between oil and the 10-year yield, and that is the 99th percentile, basically as high as it's been over that 40-year period.”
“Right now, the 10-year is actually quite responsive to oil prices, so I would not underestimate the inflation impact, and also the fact that Market participants might be thinking, well, if the war continues, that means more deficits as well. So these things are all related.”
“But my message is do not underestimate the oil price and inflation component of rising long rates.”