Here’s Why Stocks Are Rising Despite Near-Record Low Bond Yields

The stock and bond markets are telling two very different stories. The Dow Jones Industrial Average and the S&P 500 hit fresh intraday record highs on Tuesday at 18,358.63 and 2,154.79, respectively. Yet, yields on the 10-Year Treasury, at 1.5 percent, are trading near their record lows, reached last week, when yields dipped below 1.4 percent. Lower yields typically indicate concerns about the economic outlook, as fixed income is typically viewed as a safe-haven asset. Bonds and yields move in opposite directions. 'The Brexit issue has really knocked the Federal Reserve out of the picture in the near-term,' said Dean Maki, chief economist at Point72 Asset Management, referring to the UK's vote on June 23 to leave the European Union. 'Fed rate hikes are not a near-term event, certainly not this month, yet the economic data in the U.S. is getting better, so you can't ask for more in the equity market: a Fed on hold, economic data improving and that's why we're seeing this combination.' He said yields are low because the Fed is expected to delay its second rate hike and a 1.5 percent 10-year Treasury yield is still more attractive than European or Japanese sovereign debt which stands near zero or in negative territory. TheStreet's Scott Gamm reports from Wall Street.