Why does the 10-year bond go down when stocks go up? What gives?

Answer 1

It doesn't always happen that way- but you are right it generally does. The 10 yr bond is in effect a "stock" just like anything else traded. It will go up and down based on it's actual trading of that day. Typically when the stock market is up on other things- the bond market is seeing less action as people are selling their bond's off to buy other stocks. When there is a big sell off of anything traded- the price will go down.

Answer 2

On any given day, the price of bonds can react to anything. Most recently, US government bonds have been paying more attention to economic numbers (housing starts & employment) as these are possible indicators of the Federal Reserves proclivity to change rates; commodities such as oil, which can affect other economic numbers such as CPI (an inflation assesment on the cost of goods) or credit scares such as the increasing risk of subprime lending & possible defaults on the related mortgages. These issues have a greater influence on the price of bonds than the direction of the stock market.
The stock market looks at these numbers and events too, but in a different way. Both markets like the fed to lower rates, to a point. stocks like numbers which are positive for the economy (as it means more profit) while bonds like numbers that are bad for the economy (which means possibly less inflation).
It is in these different reactions to news that Stocks and Bonds will trade inversely. Reallocation from one to the other (sell your bonds to have the money to buy stocks) will exagerate this positive/negative relationship, but that is an effect, not a cause.

Answer 3

Pure coincidence; the equity and bond markets won’t always move in exactly the same way and of the same magnitude. With specific examples of the time frames you’re referring to, it could/should be fairly easy to discern the cause(s). It also depends what you are referring to when you say “stocks”; the DJIA, which is comprised of only 30 blue-chips, isn’t necessarily a good indicator of the stock market as a whole.

Answer 4

A 10 year bond's value is governed by the % on the attached coupon.
If interest rates increase the value of the bond will decrease because the coupon always stays the same. If rates drop the value of the bond will increase because it becomes a more attractive investment .