Correlations: Natural Gas, Bond Yields (US10Y), DXY, and Seasonal Patterns
1. Natural Gas and 10-Year Treasury Yield (US10Y)
Positive Correlation: Natural gas prices and the 10-year Treasury yield tend to move in tandem, driven by shared macroeconomic forces like inflation expectations and growth outlooks.
Mechanism: Rising yields signal economic strength or inflation, boosting industrial/energy demand and gas prices. Conversely, falling yields often align with gas price declines during economic softening.
2. Natural Gas and US Dollar Index (DXY)
Inverse Relationship (Historically): A stronger dollar (DXY↑) typically pressures natural gas prices, as dollar-denominated commodities become costlier for global buyers, reducing demand.
Exception: During extreme supply disruptions (e.g., geopolitical crises), a strong dollar and gas prices can rise together if global energy shortages override currency effects.
Recent Weakness: This correlation has diminished in 2024–2025, with DXY and gas prices occasionally moving independently amid supply shocks (e.g., LNG export surges).
3. Seasonal Impact on Natural Gas (Winter vs. Summer)
Winter (Peak Demand):
Demand: Heating needs (residential/commercial) drive consumption to yearly highs (e.g., 30+ Bcf/d in U.S. residential use).
Price Impact: Colder winters amplify price spikes, especially if storage inventories are low or supply chain disruptions occur.
Summer (Secondary Peak):
Demand: Electricity generation for cooling sustains demand, though typically below winter peaks.
Price Impact: Heatwaves can cause short-term surges, but prices generally remain lower than in winter.
4. Seasonal Influence on Correlations
Winter:
US10Y Correlation Strengthens: Inflation fears from heating demand can push yields and gas prices higher together.
DXY Correlation Weakens: Geopolitical supply risks (e.g., Russia-Ukraine tensions) may decouple gas from dollar strength.
Summer:
US10Y Correlation Muted: Cooling demand is less inflation-sensitive, weakening the gas-yield link.
DXY Correlation Resumes: Stronger dollar more consistently pressures gas prices absent winter-like crises.
Key Drivers Macro growth/inflation expectations Global trade costs, currency flows Weather, storage levels
Conclusion
Natural gas exhibits a strong positive correlation with 10-year yields (driven by shared macro sensitivity) and a historically inverse link to the dollar (though recently unstable). Seasonal peaks in winter amplify gas-yield ties due to inflation risks, while summer realigns gas with dollar dynamics. Geopolitical or supply shocks can override these patterns, particularly in winter.
#DOLLAR #GAS
1. Natural Gas and 10-Year Treasury Yield (US10Y)
Positive Correlation: Natural gas prices and the 10-year Treasury yield tend to move in tandem, driven by shared macroeconomic forces like inflation expectations and growth outlooks.
Mechanism: Rising yields signal economic strength or inflation, boosting industrial/energy demand and gas prices. Conversely, falling yields often align with gas price declines during economic softening.
2. Natural Gas and US Dollar Index (DXY)
Inverse Relationship (Historically): A stronger dollar (DXY↑) typically pressures natural gas prices, as dollar-denominated commodities become costlier for global buyers, reducing demand.
Exception: During extreme supply disruptions (e.g., geopolitical crises), a strong dollar and gas prices can rise together if global energy shortages override currency effects.
Recent Weakness: This correlation has diminished in 2024–2025, with DXY and gas prices occasionally moving independently amid supply shocks (e.g., LNG export surges).
3. Seasonal Impact on Natural Gas (Winter vs. Summer)
Winter (Peak Demand):
Demand: Heating needs (residential/commercial) drive consumption to yearly highs (e.g., 30+ Bcf/d in U.S. residential use).
Price Impact: Colder winters amplify price spikes, especially if storage inventories are low or supply chain disruptions occur.
Summer (Secondary Peak):
Demand: Electricity generation for cooling sustains demand, though typically below winter peaks.
Price Impact: Heatwaves can cause short-term surges, but prices generally remain lower than in winter.
4. Seasonal Influence on Correlations
Winter:
US10Y Correlation Strengthens: Inflation fears from heating demand can push yields and gas prices higher together.
DXY Correlation Weakens: Geopolitical supply risks (e.g., Russia-Ukraine tensions) may decouple gas from dollar strength.
Summer:
US10Y Correlation Muted: Cooling demand is less inflation-sensitive, weakening the gas-yield link.
DXY Correlation Resumes: Stronger dollar more consistently pressures gas prices absent winter-like crises.
Key Drivers Macro growth/inflation expectations Global trade costs, currency flows Weather, storage levels
Conclusion
Natural gas exhibits a strong positive correlation with 10-year yields (driven by shared macro sensitivity) and a historically inverse link to the dollar (though recently unstable). Seasonal peaks in winter amplify gas-yield ties due to inflation risks, while summer realigns gas with dollar dynamics. Geopolitical or supply shocks can override these patterns, particularly in winter.
#DOLLAR #GAS
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.