That's the question. Here are the facts: June was the worst month on record for outflows of open-end bond funds, according to Kristina Hooper, US head of investment and client strategies for Allianz Global Investors, who cited Morningstar data.
She notes an estimated $60.2 billion was pulled from bond funds: $43.8 billion from taxable bond funds and $16.4 billion from non-taxable bond funds. Bond ETFs also had notable outflows, as did high-yield funds.
But where did all that money go? Certainly not to stocks, the data suggests: open-end stock funds garnered only $7 billion in net inflows while equity ETFs saw net outflows.
She concludes that most of the money went to cash, citing data from the St. Louis Fed that shows that between May 27 and July 8, bank savings deposits have risen nearly $100 billion.
What does that mean? It appears at least some investors have been spooked by the rise in bond yields, but still don't have enough confidence in the stock market to place large bets there.
Of course, investing in cash has its own risks. Should markets continue to rise, that cash that has zero earning power may be a big source of future rallies.
1) Industrials continue their strong run: United Technologies raised the lower end of its EPS (to $6.00-$6.15, from $5.85-$6.15), citing "strong execution [and] additional restructuring savings." This follows on good reports from General Electric, Dover, and Johnson Controls.
It's true aerospace is on fire, making UTX a big beneficiary. Commercial engine spare orders were up 15 percent organically at Pratt & Whitney; the separate Aerospace Systems division also saw commercial spare orders up 4 percent.
While much is made of the aerospace rally, the elevator business is strong as well: new equipment orders at Otis increased 23 percent, with 39 percent growth in China. Climate, Controls & Security orders were up 6 percent organically as well. It's not just aerospace!
Still, you can't argue with the aerospace rally: Lockheed Martin blew the doors off earnings, with $2.64 vs. $2.20 estimates, and raised full year share and revenue guidance.
2) Sales will only get better, we promise! Three large industrial promised things would be better in the second half.
Take UTX: EPS growth for UTX was modest, up 4 percent from the prior year, and the difficulty with topline growth continues: organic sales were flat compared to a year ago.
But that didn't stop UTX CEO Louis Chenevert from promising things will get better: "Ongoing orders momentum has UTC well positioned for a return to organic growth in the second half of the year," but at the same time they admit that sales of $64 billion are at the lower end of their prior guidance of $64 to $65 billion.
Markets got this nugget from Dupont CEO Ellen Kullman: "We anticipate second half earnings will be significantly better than last year's second half."
Illinois Tool Works, despite coming in two cents light, affirmed they would meet full year guidance. According to the company, "we continue to have confidence in our ability to meet our profitability forecasts," CEO E. Scott Santi said.
—By CNBC's Bob Pisani