If there was one catalyst for the overall surge toward higher stocks and rates at the end of 2016, it was the expectation that the new administration's policies would do "something."

"Something" took on several forms depending on whom you asked, but the most popular definition was some combination of increased growth prospects, increased inflation, and a faster Fed rate hike timeline.  Slightly off the beaten path was the notion that the promise of tax cuts juiced the stock market, but that's definitely a consideration.  In fact, tax cuts are arguably an integral component of the other components (i.e. they're expected to contribute to growth, which begets inflation, which begets a hawkish Fed).

If the new administration and congress aren't going to tackle tax cuts until first tackling health care, and if tackling health care already looks to be fraught with uncertainty, the entire reaction to "something" is called into question.  That's generally what drove trade today (stock swoon and bond rally).  The fact that investors have been WAITING for stocks to show some sign of post-election weakness means that there was ample additional momentum that didn't want to get left behind in the event a big sell-off was FINALLY happening. 

Bond markets actually began rallying before stocks jumped off a cliff, but stocks definitely ended up helping bonds as losses grew more severe.  10yr yields broke below the important 2.46% level and quickly moved to test the 2.42% level.  This trend is our friend for now, but volatility potential is high--especially if congress is able to give the appearance of some consensus later this week.  If political gridlock doesn't improve, things could get very interesting very quickly.