Yesterday, the yields on U.S. Treasury paper popped across the board, probably caused by bond traders who are starting to sense reluctance by foreign investors to buy U.S. debts at current rates.

Higher yields/rates cause concern for quantitatively-oriented equity traders who are focused on Discounted Cash Flow models. Ergo, the equity market had quite a slide yesterday afternoon.

*** As "C.Note" informs us, "The yield on the 4-wk TB bought yesterday was 4.684%", which is considerably higher than shown here. The data in the table above is from Yahoo Finance, redistributed from ValuBond.com. I think there was quite a shift in the data when Yahoo switched recently from BankRate.com, as I recall. You will of course find different data from different vendors, e.g., Bloomberg. So what I recommend is that if you are using this data for trend & cycle research purposes only, as I do, you ought to stick with one reliable service. I happen to use the Yahoo Finance site because it is freely available to anybody, and is a popular site.***

Traders ought to watch the bond market closely here. A couple days ago, there were signs that bonds were strengthening. That sentiment seems to be shifting as oil prices started moving higher.

If commodity prices continue to rise at a fast clip, it could put inflationary pressures on the U.S. economy, further push down against the $USD, and push bond yields higher and PE multiples lower.

Another point: traders today cannot dismiss the importance of quantitative modeling and (linked) order management systems. By far the largest amount of order flow to NYSE/NASDAQ is computer program trading. I'd say that U.S. bond yields / interest rates have the greatest single impact on those computer-generated trading decisions, particularly in the short-term.