Since early March, McDonald's stock has declined by approximately 32 percent, while the 10-year US Treasury yield has risen by the same margin. Data from the Chicago Board Options Exchange shows the yield increasing from roughly 4 percent to 5.24 percent by September 28, reaching a 19-year high. During this period, McDonald's share price dropped from a peak above $340 to $233.60.
Recent trading sessions highlight this inverse pattern. Over the last 23 trading days, yields rose on 19 occasions, gaining 14 percent, while McDonald's stock fell during 19 of those sessions, losing 14 percent. Tom Lee, co-founder of Fundstrat Global Advisors, noted the negative correlation but stated he is uncertain about the underlying cause of this trend.
Analysts suggest several factors that might influence the stock, including McDonald's $40 billion in long-term debt, which could face higher borrowing costs due to rising rates. Other theories include consumer resistance to menu price increases, anticipated dips in US sales, and the impact of Federal Reserve rate hikes. Additionally, the company's stock fell over 6 percent in three sessions following its September 23 Investor Day.
Despite these observations, experts caution that the precise mirror image may be a spurious correlation. Statisticians note that two trending series can appear linked by chance over a seven-month period. The validity of this pattern will be tested if the 10-year yield reverses while the stock price continues to decline, which would suggest the observed relationship is merely coincidental.
