One bubble was driven by a technological innovation that would change the way businesses and consumers do business and interact. The Internet was and still is a positive force in our lives. It just played perfectly into Wall Street’s tendency to inflate the asset prices of anything associated with the next big thing. But technology, home ownership or tulips are not driving a bubble unfolding right now.

Fear is.

“If one compares the trading alignment of equity returns from 1990 to 2005 and that of 10-year Treasury bonds since 2000, the relationship is startling,” wrote Tobias Levkovich, head of North America equity strategy at Citigroup Global Markets. “It would suggest that the tremendous money flows into bond funds could end with similar losses to that which transpired for equity investors who poured cash excessively into stock funds back in 2000.”

Levkovich found that the first 10 years of the run in the S&P 500 total return index starting in 1990 and the first 10 years of the 10-year Treasury rally starting in 2000 have a correlation of almost 90 percent. “The similarities should cause anxiety especially when one considers the high correlation and what it suggests about plausible future trends for bonds,” wrote the strategist. We all know all too well what happened tech stocks the next five years. The strong correlation hints that 2010 could be 2000 for Treasurys.

Investors pulled $12.4 billion from U.S. equity funds last month, even as stocks rebounded, according to Morningstar. They added $22.3 billion into taxable bond funds, the firm said. The iShares Barclays 20-Plus Treas. Bond Fund

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[TLT  Loading...      ()   ], which tracks the performance of longer-dated government bonds, hit a new 52-week high today.

The Federal Reserve will begin buying more Treasury securities to stimulate the economy on Tuesday, keeping a bid under the securities. However, outside of the Federal Reserve and the risk adverse retail investor, Treasurys may be slowly losing backers on concerns about mounting deficits.

Pimco, the world’s largest bond manager, cut its holdings of government-related debt to 54 percent of assets in July from 63 percent a month earlier. Furthermore, the latest government data shows that China’s holdings of U.S. Treasury securities fell by another $24 billion in June. This follows a $32.5 billion drop in July and brings China’s total holdings to $843.7 billion.

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John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.

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