Treasuries Still Rising with Equities

Another strange relationship right now is equities versus bonds. With the equity indices up 1.25%-1.45% today, and up 3.5% or so during the past week, shouldn't we figure that the bond market might be under a bit of pressure as some of the flight-to-safety hedgers unwind their positions?

Well, from the behavior and juxtaposition of the SPDR S&P 500 (SPY) versus the 20+ Year Treasury Bond ETF (TLT), the equity rally apparently has not allayed much of the fear out there that would argue for the liquidation of Treasuries and freeing up of capital to reallocate into stocks heading into month end.

Perhaps what the SPY-TLT comparison chart tells us is that the strength in the equity indices should be ignored, and that the threat of economic dislocation and deflation are alive and very well. From my perspective, unless and until the TLT presses beneath 121.60, I will retain a healthy dose of skepticism about the long side of the SPY.