For context, the moves of crude oil and the S&P have seen a correlation of roughly 0.5 this year.
The tight relationship between stocks and yields makes sense to the extent that concerns about economic strength should hamper stock prices and depress bond yields simultaneously. Unfortunately, 2016 has been chock-full of those concerns. China devaluation and the U.K.'s vote to exit the European Union are the two most prominent shocks that have added to the general state of agitation over long-stagnant global growth.
In addition, concern over when the Fed will next raise rates should also increase the closeness of the relationship. On the margins, a news item that makes a rate hike look less likely might be expected to push bond yields lower, and stock prices higher.
However, the close relationship between yields and stock prices should make investors think twice about at least one piece of conventional market wisdom. If marginal interest in stocks came primarily from exasperation with the low yields offered by bonds, then stocks should rise when yields fall. Instead, the opposite is happening.
In other words, the chart above could be used to make the argument that low yields do not appear to be the market's primary motivator — contrary to those who say central banks are fueling a bubble in equities.
Ultimately, the market makes more sense from a macro-technical standpoint when bond prices (which move inversely to yields) and stock prices are going in opposite directions. After all, investors who are buying the one are assumed to have raised that money by selling the other. From this standpoint, the tightening relationship might be seen as a sign of more normal market conditions.
Meanwhile, the takeaway for the bulls is this: If you're hoping for yields to slide even further, you'd better rethink your wishes.