The traders are keeping a close eye on action in the bond market with money flooding out of safe haven assets and into stocks.
The key catalyst for bond market sell-off was the widely watched U.S. ISM manufacturing index, which rose to 56.3 in August, beating economists' consensus forecast for a fall to 53.0.
In other words, instead of an expected decline in factory output, the data showed it increased.
"With the Institute for Supply Management (report) not only showing a gain from July but completely confounding the consensus of economists for a sharp drop, all of a sudden the economic world is not coming to an end, and that is sharpening the appetite for risk assets," says David Dietze of Point View Financial Services, in a Reuters interview.
As a result, the 30-year Treasury bond price, which moves inversely to its yield, tumbled three points for a yield of 3.68 percent.
And the benchmark 10-year Treasury note's price, dropped more than one point for a yield of 2.60 percent, versus 2.54 percent before the manufacturing report and 2.48 percent late on Tuesday.
What should you make of the move?
As you might remember on Monday, Richard Volpe of RBS told the Fast Money traders that a bull-market correction in Treasuries had begun.”
RBS cited the trend change after the weekly 10-year note yield formed a “hammer bottom” on Aug. 27, a “classic” indication of a “short term correction.”
Volpe also told the desk a correction should last from two to four weeks and counseled investors to wait until the 10-year note yield climbs to 2.87 percent before beginning to buy again.
However, he also said, “the long- term trend for bonds is still bullish, but we need to flare out excesses in bullish sentiment and positioning to get to a more solid footing.”