Bond Market Leading

The initial reaction to the Fed meeting was clear.  The bond market wants to go lower, and that is scaring the equity market.  Usually weakness in bonds doesn't necessarily lead to weakness in stocks, but what we saw with the selloff in gold is that financial assets are highly correlated, so when any major asset sells off too much, it panics investors and they sell everything. 

Right now, the bond market is leading the stock market lower.  But I remain bullish long term on the bond market, so I don't think this selloff will last long.  What did surprise me was the vigor with which the USDJPY bounced back from its deep selloff after the Fed announcement.  It tells me that a lot of the fast money was long yen going into the meeting and they are unwinding in a hurry.  It seems like this dollar uptrend will eventually have a blowoff top before it goes the other direction.  It is the TINA currency.  There is no alternative. 

I do expect this selloff to extend as post options expiration often leads to a lot of volatility and the charts are setup for a capitulative selloff down to 1560 to 1570.