Treasury yields are consolidating above 3%, the gold price is down, and markets are nervous.
Not surprising, considering equity markets have had it all their own way for more than a decade, with barely a sniff of a serious interest rate from any major central bank anywhere in the world.
That dynamic has begun slowly to change, but as is the way with the financial markets, it took a specific trigger before the rude awakening could occur.
That trigger was the increase in the 10-year Treasury yield to over 3% on Tuesday, and although the gains were initially given back, they were subsequently piled on again.
At the open on Friday, 10-year Treasury yields were marked at 3.005%, while 30-year yields were an even more attractive 3.186%.
The US government is set to auction a new US$29bn round of Treasuries next week, and it will be interesting to see what the appetite for them will be.
In the meantime, gold has come off the recent highs its hit on trade war talk, and continues to trade lower on firmer expectations of rising interest rates.
Equity markets traded down too, although one notable bright spot was the resources and mining sector, which had a couple of strong days this week, on positive sentiment for the global economy.
In particular, a strong set of PMI numbers out of the US reinforced the positive impression left by the previous week’s 6.8% quarterly growth figure from China.
The major miners in London, with their heavy exposure to copper, are especially well-positioned to benefit, as copper is likely to be the commodity most in demand and with the least risk of oversupply.
BHPBilliton (LON:BLT) is trading close to three year highs, while Rio Tinto (LON:RIO), Glencore (LON:GLEN) and Antofagasta (LON:ANTO) are not far off five-year highs.
Across the Atlantic, meanwhile, S&P has just upgraded its risk ratings for Barrick Gold, Kinross (TSE:K) and Goldcorp (TSE:G).
"We now view leading gold producers as better positioned to manage risks such as future price volatility, and much of this reflects the steady deleveraging these issuers have done in the past few years," said S&P analyst Jarrett Bilous.
The UK miners have fixed their balance sheets too, and this is reflected in the new favour they have found with markets.
Questions about the future still remain. As far as the diversified companies are concerned, there is the question of focus and asset allocation. Copper remains the favoured commodity as new supply is thin on the ground, and what supply there is is subject to disruptions, in particular at the Escondida and Grasberg mines.
The gold companies will have to contend with increased yields more directly, as the correlation in pricing is that much more direct. On the one hand there’s the likely increase in US interest rates, which is currently bringing out the sellers.
But on the other hand, there’s the continuing appeal of the safe have status in a world where diplomatic norms have been torn up by the sitting US president and Russia seems increasingly to be slipping into the role of rogue state previously reserved for more minor nations.
Both gold and the generalist miners will feel some negative drag from a wider equities rout, if it comes, but their status as proxies for the global economy may provide some protection.
After all, it’s worth remembering that yields are being allowed to rise precisely because the global economy is at last returning to something like normality after more than a decade of artificially low interest rates and stimulus.
If the price for increased global wealth turns out to be a correction in the equity markets, the only ones likely to be complaining will be those caught long. In mining in particular, underlying earnings should hold up well. And that will support mining company dividends, and in turn yields.