Why stock investors must also pay attention to the bond market: Fundstrat strategist

Yahoo Finance's Jared Blikre sits down with Fundstrat Managing Director and Global Head of Technical Strategy, Mark Newton, as they discuss Treasury yields.

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MARK NEWTON: Well, it's really important to pay attention to treasury yields, even if you're not involved in fixed income as an investor or a portfolio manager because over the last couple of years, we've seen almost exactly negative correlation with how yields move, to how equities move.

So you see this first arrow in the middle of the screen. This showed the actual breakout in treasury yields that happened right back on January the third. So that's exactly when the S&P peaked out earlier this year.

The middle part shows that yields peaked out with the second arrow right near June 16. And that's when equities bottomed. We had a big pullback in yields and then we started to break out again in mid-August. And that's right when the equity market peaked out and has been selling off as yields have progressed higher.

So in order to think that we're truly going to bottom out in equities, we really need to see some evidence of this parabolic locomotive freight train that is treasury yields really start to roll over. Because right now, yields are pressing up. And that certainly hasn't been helpful to equities.