The relationship between the 10-year Treasury notes, VIX and EUR/USD

The chart shows the movements and correlation between the following financial instruments: 10-year Treasury Note, the currency pair EUR/USD, S&P 500, the dollar index and VIX.

As the 10-year notes are declining, after reaching the peak of 127 this June, the pair EUR/USD showed gains and is trading around 1.1416.

Parallel with that, DXY declined, and VIX is rising.

The last big increase in VIX was in the middle of May, when were the elections in the UK. In the same period, the Treasury notes reached their high.

Before that, big movements in the index of fear took place in April, when North Korea started it's ballistic missile tests. The 10-year Treasury Notes reacted as well.

From this we can conclude, that every increase in the volatility is leading to a positive sentiments in the Notes, as investors prefer safer financial instruments - the Treasury Notes.

At the moment S&P 500 is trading around it's historic highs, and if VIX continues to rise, we could expect a decline in the riskier assets - the equities.

Jr Trader Alexander Kumanov

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