Consumer Staples (XLP) vs 10Y Treasury Yield
XLP (Consumer Staples Select Sector SPDR Fund) tracks consumer staples sector of S&P 500. Top holdings April 2026: Procter & Gamble (PG) ~14 percent, Costco (COST) ~12 percent, Coca-Cola (KO) ~9 percent, Walmart (WMT) ~9 percent, PepsiCo (PEP) ~6 percent.
Also known as: Consumer Staples (XLP) (ETF_XLP, consumer staples) · 10Y Treasury Yield (10Y yield, 10 year treasury, TNX)
Why This Comparison Matters
XLP (Consumer Staples Select Sector SPDR Fund) tracks consumer staples sector of S&P 500. Top holdings April 2026: Procter & Gamble (PG) ~14 percent, Costco (COST) ~12 percent, Coca-Cola (KO) ~9 percent, Walmart (WMT) ~9 percent, PepsiCo (PEP) ~6 percent. The 10-year Treasury yield (FRED DGS10) sits at 4.31 percent. XLP has bond-proxy characteristics (high dividends ~2.5 percent, stable cash flows) but also inflation pass-through (pricing power). Pre-2024 XLP had moderate -0.30 to -0.45 correlation with 10Y. The 2024-2026 era saw XLP underperform: defensive characteristics overshadowed by AI capex tech rally + GLP-1 drug impact (Costco beat, but P&G/PepsiCo facing headwinds from Ozempic/Wegovy reducing consumer food/beverage demand).
The April 2026 Configuration
XLP price approximately $80 (April 2026, near recent highs). 10Y yield 4.31 percent. Top holdings: P&G ~14%, Costco ~12%, Coca-Cola ~9%, Walmart ~9%, PepsiCo ~6%. Combined top 5 ~50 percent. Dividend yield 2.5 percent.
XLP composition: food & beverage (PEP, KO, MDLZ, KHC, MO) ~30%; household products (PG, CL, CHD) ~25%; personal care (EL, KMB) ~15%; retail (COST, WMT) ~21% (Costco + Walmart); food retail (KR) ~3%; tobacco (PM, MO) ~6%.
XLP performance 2024-2026: lagged SPY substantially. 2024 +14% vs SPY +25%. 2025 modest. 2026 stable. Defensive characteristics didn't pay during AI capex boom. GLP-1 drug impact: Walmart/Costco grocery same-store-sales growth slower; P&G/PEP/KO facing volume headwinds.
Forward-looking: Costco continues fundamental outperformance (membership model + value proposition). Walmart e-commerce + grocery dominance. P&G/Coca-Cola facing GLP-1 transition. XLP sensitivity to 10Y modest but defensive bid emerges during equity volatility.
Why XLP Has Mixed Rate Sensitivity
XLP rate sensitivity less direct than XLU/XLRE due to multiple offsetting drivers.
Bond proxy framework: high dividends (~2.5%), stable cash flows, predictable demand. Should move inversely to 10Y. 100bp 10Y rise typically associated with 3-5% XLP decline (vs 8-12% XLU/XLRE).
Inflation passthrough: pricing power offsets duration drag. Companies pass cost increases to consumers. P&G, Coca-Cola, Costco have pricing power. Inflation surge regimes (2021-2022) initially compressed XLP multiples but earnings recovered.
Defensive bid: during equity volatility, defensive sector flows compress XLP risk premium. Net effect can be positive even with rising rates.
GLP-1 disruption: Ozempic/Wegovy reducing consumer food/beverage demand. Specific to XLP holdings (PEP, KO, MDLZ, KHC). New 2024-2026 era headwind not historical.
The practical implication: XLP modestly inversely correlated to 10Y with multiple offsetting factors. Pre-2024 -0.30 to -0.45 correlation. 2024-2026 era weaker correlation due to GLP-1 specific impacts.
How XLP Holdings Differ in Rate Sensitivity
XLP holdings vary in rate sensitivity. Costco (COST 12%): premium retailer, no rate sensitivity directly, growth-style multiples. Walmart (WMT 9%): mass retailer, modest rate sensitivity through real estate financing. P&G (PG 14%): consumer staples, defensive, dividend yield 2.4%. KO (9%): same. PEP (6%): same.
Effective duration: COST/WMT have lower effective duration (growth multiples and operational efficiency). PG/KO/PEP have higher effective duration (dividend-yield-sensitive).
April 2026: COST +30% past 12 months (membership growth, e-commerce strength). WMT +20% (grocery dominance, e-commerce). P&G/KO/PEP modest gains (single-digit). Compositional shift: retail (COST + WMT) outperforming traditional staples (PG, KO, PEP).
The practical implication: XLP outperformance increasingly driven by COST + WMT (growth retailers within consumer staples classification). Traditional staples (PG, KO, PEP) facing GLP-1 + valuation headwinds.
How the Pair Performs Through Rate Cycles
Three rate-cycle examples.
2018-2019: 10Y rose 2.4% to 3.2% (Q4 2018) then 1.5% (mid-2019). XLP -10% Q4 2018 then +25% through 2019. Modest duration response.
2020 COVID: 10Y 1.9% to 0.5% (March 2020). XLP -22% peak-to-trough COVID flash crash. Recovered with grocery/staples bid.
2022 hiking: 10Y 1.5% to 5.0% peak. XLP -16% peak-to-trough October 2022. Inflation passthrough partially offset duration drag.
2024 disinflation + Costco rally: 10Y stable. XLP +14%. Costco/Walmart drove gains.
2025-2026 stable era: 10Y 4-5%. XLP modest gains. GLP-1 + valuation concerns capped upside.
The pattern: XLP modest rate sensitivity. Inflation passthrough + defensive bid offset pure duration drag. Recent era (2024-2026) saw retail outperformance lift XLP despite defensive nature.
How the Pair Performs in Stress
Stress history.
2008-09 GFC: XLP -33% peak-to-trough. 10Y 4.5% to 2.0%. Even defensive staples hit by liquidity crisis but recovered faster than cyclicals.
2018 Q4 Fed pivot: XLP -10%.
2020 COVID: XLP -22% peak-to-trough. Stockpiling boost.
2022 hiking: XLP -16%. Inflation passthrough offset duration.
2023 March SVB: XLP +2%. Defensive bid.
2024-2026 AI era: XLP underperforms growth tech but stable absolute.
2026 Iran war: XLP held (defensive bid plus retail strength).
The pattern: XLP defensive characteristics work in pure equity volatility. Underperforms in tech-led growth bulls.
Volatility and Trading
XLP realized volatility approximately 11-15 percent annualized (lower than other sectors due to defensive). Beta to SPY ~0.65-0.75.
60-day rolling correlation between XLP and 10Y: -0.20 to -0.40 in 2024-2026 (modest negative). Pre-2024 -0.30 to -0.45.
XLP exposure: XLP ETF or VDC (Vanguard Consumer Staples). 10Y exposure: TLT or futures.
Pair returns. 2024-2026 long XLP / short TLT modest carry. 2008-09 long TLT / short XLP gained substantially. 2022 hiking long XLP / short TLT modest gains (XLP -16%, TLT -50%).
Most actionable: defensive bid signals (VIX rising); GLP-1 prescription growth (Eli Lilly, Novo Nordisk earnings); Costco/Walmart membership/loyalty trends.
Reading the Pair as a Trading Tool
For macro allocators, XLP-vs-10Y provides defensive rotation classification.
10Y rising + XLP rallying: pricing-power era + retail strength (current 2024-2026 partial). Long XLP through retail names (COST, WMT).
10Y rising + XLP falling: classical duration framework. Pre-2024.
10Y falling + XLP rallying: bond-proxy regime + defensive bid.
10Y falling + XLP falling: rare. Often signals consumer-specific concerns.
April 2026 setup: 10Y 4.31% + XLP $80 (near recent highs). Mixed regime - retail strength + defensive bid offsetting rate pressure.
Key watches: Costco/Walmart monthly sales reports; P&G/KO/PEP earnings (April-May 2026); GLP-1 prescription growth; consumer sentiment (Michigan).
How XLP-vs-10Y Compares to Other Sector-vs-Rates Pairs
XLP/10Y captures defensive consumer + retail. Compared.
Vs XLU/10Y: XLU pure bond proxy + AI data center demand. More rate-sensitive than XLP.
Vs XLRE/10Y: XLRE REITs duration + AI capex. More rate-sensitive than XLP.
Vs XLY/10Y: XLY consumer discretionary growth-cyclical. Different drivers.
Vs XLF/10Y: XLF positive rate sensitivity. Opposite.
April 2026 reading: 10Y 4.31% + XLP $80 (defensive bid + retail strength). Pair complements XLU (pure defensive), XLRE (REIT), XLY (cyclical consumer).
Forward View: Watch Costco and GLP-1
XLP $80 (April 2026). 10Y 4.31%. P&G ~14% of XLP, Costco ~12%, KO ~9%, WMT ~9%, PEP ~6%. Costco +30% past 12 months. WMT +20%. PG/KO/PEP modest. GLP-1 transition (Ozempic/Wegovy) reducing food/beverage demand for traditional staples.
Forward-looking: Costco/Walmart continue retail outperformance. P&G/KO/PEP facing GLP-1 transition + valuation. Defensive bid emerges during equity volatility (Iran war 2026 helped XLP relative). 10Y stability supports modest XLP gains.
Key watches: Costco monthly sales (typically first week of month); Walmart quarterly results; P&G/KO/PEP earnings; GLP-1 growth (Eli Lilly, Novo Nordisk).
Key risks: GLP-1 acceleration further compressing food/beverage demand; deflation regime hitting pricing power; recession affecting consumer (impacts retail). Expected XLP range $77-$83. 10Y range 4.0-4.5%.
Pricing Power as Inflation Hedge
XLP holdings have varying pricing power. P&G demonstrated +5-8 percent annual price increases through 2022-2024 inflation. Coca-Cola similar. PepsiCo similar. Costco lower price increases (membership-driven model). Walmart competitive pricing.
Pricing power varies by category. Premium brands (P&G Tide, KO Coca-Cola, EL Estee Lauder) higher pricing power. Commodity goods (KR Kroger private label, KHC Heinz) lower. Tobacco (PM, MO) substantial pricing power.
The practical implication: XLP partially hedges inflation through pricing power. Rising 10Y + rising inflation produces mixed signal: bond proxy negative, pricing power positive. Net effect depends on inflation regime + which dominant.
April 2026 setup: inflation moderate (CPI 3.3%, core 2.6%). Pricing power benefit moderate. Defensive bid helps.
Conditional Forward Response (Tail Events)
How 10Y Treasury Yield has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Consumer Staples (XLP). Computed from 1,242 aligned daily observations ending .
Following these triggers, 10Y Treasury Yield rises 0.71% on average over the next 5 sessions, versus an unconditional baseline of +0.50%. 124 qualifying events; 10Y Treasury Yield closed positive in 54% of them.
Following these triggers, 10Y Treasury Yield rises 0.90% on average over the next 5 sessions, versus an unconditional baseline of +0.50%. 124 qualifying events; 10Y Treasury Yield closed positive in 59% of them.
Past behavior in the tails is descriptive, not predictive. Mean response is the simple arithmetic mean of compounded 5-day forward returns following each trigger event; baseline is the unconditional mean across the full sample window. Edge measures the gap between the two.
90-Day Statistics
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Frequently Asked Questions
What are XLP and the 10Y Treasury yield?+
XLP (Consumer Staples Select Sector SPDR Fund) tracks consumer staples sector of S&P 500. Top holdings April 2026: Procter & Gamble ~14%, Costco ~12%, Coca-Cola ~9%, Walmart ~9%, PepsiCo ~6% (top 5 ~50%). XLP price ~$80 April 2026. Dividend yield 2.5%. 10Y Treasury yield 4.31%. XLP composition: food & beverage (PEP, KO, MDLZ, KHC, MO) ~30%; household products (PG, CL, CHD) ~25%; personal care (EL, KMB) ~15%; retail (COST, WMT) ~21%; food retail (KR) ~3%; tobacco (PM, MO) ~6%. XLP 2024 +14% vs SPY +25%. Costco +30% past 12 months; Walmart +20%; PG/KO/PEP modest gains.
Why does XLP have mixed rate sensitivity?+
Multiple offsetting drivers. Bond proxy framework: high dividends ~2.5%, stable cash flows. 100bp 10Y rise typically associated with 3-5% XLP decline (vs 8-12% XLU/XLRE). Inflation passthrough: pricing power offsets duration drag. P&G, KO, Costco have pricing power. Defensive bid: during equity volatility, defensive sector flows compress XLP risk premium. GLP-1 disruption (Ozempic/Wegovy) reducing food/beverage demand for traditional staples. New 2024-2026 era headwind. XLP modestly inversely correlated to 10Y with multiple offsetting factors. Pre-2024 -0.30 to -0.45 correlation. 2024-2026 weaker due to GLP-1 specific impacts.
How do XLP holdings differ in rate sensitivity?+
COST 12%: premium retailer, no rate sensitivity directly, growth-style multiples. WMT 9%: mass retailer, modest rate sensitivity through real estate financing. PG 14%: defensive, dividend yield 2.4%. KO 9%: same. PEP 6%: same. Effective duration: COST/WMT lower (growth multiples + operational efficiency). PG/KO/PEP higher (dividend-yield-sensitive). April 2026: COST +30% past 12 months (membership growth + e-commerce). WMT +20% (grocery + e-commerce). PG/KO/PEP modest gains (single-digit). Compositional shift: retail (COST+WMT) outperforming traditional staples. Traditional staples facing GLP-1 + valuation headwinds.
How does the pair perform through rate cycles?+
2018-2019: 10Y 2.4% to 3.2% (Q4 2018) then 1.5% (mid-2019). XLP -10% Q4 2018 then +25% through 2019. Modest duration response. 2020 COVID: 10Y 1.9% to 0.5% (March 2020). XLP -22% peak-to-trough flash crash. Recovered with grocery/staples bid. 2022 hiking: 10Y 1.5% to 5.0% peak. XLP -16% peak-to-trough October 2022. Inflation passthrough partially offset duration drag. 2024 disinflation + Costco rally: 10Y stable. XLP +14%. Costco/Walmart drove gains. 2025-2026 stable era: 10Y 4-5%. XLP modest gains. GLP-1 + valuation concerns capped upside. Pattern: XLP modest rate sensitivity. Inflation passthrough + defensive bid offset pure duration drag.
How does the pair perform in stress?+
2008-09 GFC: XLP -33% peak-to-trough. 10Y 4.5% to 2.0%. Even defensive staples hit by liquidity crisis but recovered faster. 2018 Q4 Fed pivot: XLP -10%. 2020 COVID: XLP -22% peak-to-trough. Stockpiling boost. 2022 hiking: XLP -16%. Inflation passthrough offset duration. 2023 SVB: XLP +2%. Defensive bid. 2024-2026 AI era: XLP underperforms growth tech but stable absolute. 2026 Iran war: XLP held (defensive + retail strength). Pattern: XLP defensive characteristics work in pure equity volatility. Underperforms in tech-led growth bulls.
How is the pair traded?+
XLP realized volatility ~11-15% annualized (lower than other sectors due to defensive). Beta to SPY ~0.65-0.75. 60-day correlation XLP-10Y -0.20 to -0.40 in 2024-2026 (modest negative); pre-2024 -0.30 to -0.45. XLP exposure: XLP ETF or VDC (Vanguard Consumer Staples). 10Y exposure: TLT or futures. 2024-2026 long XLP / short TLT modest carry. 2008-09 long TLT / short XLP gained substantially. 2022 hiking long XLP / short TLT modest gains (XLP -16%, TLT -50%). Most actionable: defensive bid signals (VIX rising), GLP-1 prescription growth, Costco/Walmart membership/loyalty trends.
How is the pair used for trading?+
10Y rising + XLP rallying: pricing-power era + retail strength (current 2024-2026 partial). Long XLP through retail (COST, WMT). 10Y rising + XLP falling: classical duration framework. Pre-2024. 10Y falling + XLP rallying: bond-proxy + defensive bid. 10Y falling + XLP falling: rare. Consumer-specific concerns. April 2026: 10Y 4.31% + XLP $80 (near recent highs). Mixed regime - retail strength + defensive bid offsetting rate pressure. Watch Costco/Walmart monthly sales, P&G/KO/PEP earnings (April-May 2026), GLP-1 prescription growth, consumer sentiment (Michigan).
How does pricing power work as inflation hedge?+
XLP holdings have varying pricing power. P&G demonstrated +5-8% annual price increases through 2022-2024 inflation. KO similar. PEP similar. Costco lower (membership-driven). Walmart competitive. Premium brands (P&G Tide, KO Coca-Cola, EL Estee Lauder) higher pricing power. Commodity goods (KR private label, KHC Heinz) lower. Tobacco (PM, MO) substantial. XLP partially hedges inflation through pricing power. Rising 10Y + rising inflation produces mixed signal: bond proxy negative, pricing power positive. Net effect depends on inflation regime + which dominant. April 2026: inflation moderate (CPI 3.3%, core 2.6%). Pricing power benefit moderate. Defensive bid helps.
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