The biggest change in the makeup of markets this month is the reversal in rates. As yields climb, bond market proxies in the equity market, the most-crowded trade of the last year, are in for a bruising. But there could be big winners as well. Source: FactSet While it's coming off a very low level, the 10-year yield made a vicious reversal higher this month, climbing from 1.64 percent on Jan. 30 to 1.98 percent Tuesday, a 21 percent move. The stronger-than-expected jobs report coupled with a Federal Reserve that needs to raise its benchmark rate in the next 12 months to save its credibility signaled to many strategists that a 30-year downdraft in bond yields could finally be over. If that's the case, utility, real estate and dividend stocks look the most vulnerable here as their payouts get growing competition from bonds. Meanwhile, cyclical stocks like banks and technology, which tend to lead during higher-rate periods, could become the new market leaders of 2015. "Last week's bond market selloff shows us that it won't take much of a rise in yields to derail the rally in defensive stocks," said Russ Koesterich, BlackRock's global chief investment strategist. "The problem is that after a relentless search for yield, investors have piled into dividend-yielding stocks, or what we call 'bond market proxies.'" The Utilities SPDR , up 18 percent over the last one year, was knocked down by 4 percent over the last three trading days. The ETF sports a dividend yield above 3 percent. The Dow Jones Global Real Estate SPDR , which also is up 18 percent the last 12 months, dropped 2 percent the last three days. It has a dividend yield of almost 3 percent. Dividend payers are holding up a little better, but are still negative over the last two days according to the Vanguard Dividend Appreciation ETF . Meanwhile, the S & P 500 is higher. "As a result of the stronger-than-expected jobs report, investors also seemed to accelerate their own timetable as to when the Fed will begin raising rates, as witnessed by the decline in stock prices in general, and the selloff in higher-yielding asset classes, sectors and subindustries, in particular," wrote Sam Stovall, U.S. equity strategist for S & P Capital IQ. Read More Odd couple energy, consumer stocks trick traders Stovall's crunched the numbers on individual stocks with high dividends and found they could be worse off than what the ETFs suggest. The top third of the S & P 500 by dividend yield, with an average payout of 3.4 percent, dropped 0.8 percent on the day of the jobs report. The bottom third was unchanged. After the U.S. added almost 260,000 jobs in January and earnings increased by 0.5 percent, the Fed is beginning to run out of excuses as to why it's still at zero interest rates. Deutsche Bank ran correlation figures on S & P industries to the three-month change in the 10-year yield. Commercial banks are the single most positively correlated industry while utilities have the biggest negative correlation. Telecom and tobacco also performed poorly. So in order to find more winners, CNBC.com turned to Kensho, a quantitative tool that tracks historical data and is used by hedge funds to uncover winning trades. ETFs linked to a strong economy do well when interest rates rise. The iShares DJ Energy ETF , the iShares PHLX semiconductor ETF and the iShares Dow Jones Transportation ETF all gained, on average, more than 8 percent during a 30-day period of rising rates. The search looked at 19 such periods of rising rates over the last 10 years. Smaller stocks, which don't have big borrowing costs like big stocks, also do well. The iShares MidCap 400 Growth and the Russell 2000 Growth ETF also both gained more than 8 percent, on average. Read More New ideas: So go financials, so goes S & P? To be sure, a higher 10-year yield alone doesn't mean a windfall for banks automatically. It all depends on the slope of the yield curve, which mirrors the spread between what rate banks borrow at and which longer-term rates they use to lend out. Right now, short-term rates are moving up as quickly as longer-term rates so that spread is not positive for banks. Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.
A trader works on the floor of the New York Stock Exchange.
The biggest change in the makeup of markets this month is the reversal in rates. As yields climb, bond market proxies in the equity market, the most-crowded trade of the last year, are in for a bruising.
But there could be big winners as well.