Sea Change in Bonds

We have come full circle in the equity/bond relationship.  Last year was bonds leading equities, with fears of an interest rate spike causing equity weakness.  So when bonds were weak, so were equities.  This year, bonds have been strong while equities have been weak, regaining that inverse relationship.  Now, we are starting to get more equity up, and bonds up situations.  For example, yesterday, a huge rally on the Fed ignited both bonds (all except really long term bonds) and stocks.  And today, we have a flat open and bonds gapping up.

All the reduction in Treasuries and duration in bond portfolios seems complete.  Despite stocks being up on the year, bonds have been doing very well.  

Now I don't think this can continue for long.  There is a lot of liquidity out there, but it is being slowly reduced and stocks and bonds have to eventually go in opposite directions.  Wall Street seems to be quite bullish on the economy for Q2, but I disagree.  The economic data in Q1 smells like the beginning of an economic slowdown, I don't believe weather was that big a factor.  Thus, I am betting on bonds continuing their outperformance over stocks.  

As for equities here, it feels like its too early to short 'em, and too late to buy 'em.  Just watching for now.