Bonds are off to an even stronger start on Friday, largely in response to a big risk-off move that rifled through markets in the last 90 minutes of trade yesterday and carried over to early trading in Asia.  "Risk-off" implies stock prices and bond yields moving lower together, and that's a departure from the recent trend where the two have moved in the opposite direction in response to the Fed policy outlook. 

While the chart above gives a good general impression of yields and stocks varying inversely, it's even easier to see the correlation when we view bonds in terms of PRICE (effectively inverting the yellow line above).  If it helps, just think of the following chart as "asset prices," be they stocks or bonds, and then the notion that Fed policy is the tide that lifts (or sinks) all boats.

Now we'll advance the same chart to include the last 24 hours of trading.  It shows a big departure from the recent trend with bonds improving and stocks falling.

What's up with this?  First off, at most moments in economic history, this is the NORMAL trend (remember, the yellow line is inverted from the normal YIELD view, so this is merely showing "money flowing out of stocks and into bonds" at face value). 

There are a few reasons this could be happening.  It's possible that bond traders have had their fill of selling for now and are entering into an impressionable couple of trading days before making their next big decisions after next week's Fed announcement.  It's also possible that these stock losses were big enough to force investors to seek safer havens (which is definitely a thing that sometimes happens even when the non-standard correlation seen in the first two charts had generally been in effect).

Bottom line, we'll be watching the stock/bond relationship closely today to see how reliant the bond rally may be on stock market weakness.