Often, drops in Treasury yields can give a boost to stock prices because they make loans cheaper to get and give a boost to the economy. But the reason for this recent drop in yields, softer economic growth expectations, may mean that’s not the case this time, according to Morgan Stanley strategists led by Michael Wilson.

The drop in US shares was in sharp contrast to Europe, where equities staged one of their strongest advances of 2025. The moves extended an international rotation trade that has held sway most of the year.