Yield Surge Sends Signal of a Scary Second Half

Yield Surge Sends Signal of a Scary Second Half: "Investors are using the recent run-up in bond yields to justify some portfolio changes in preparation for what could be a much different second half.

Though the move in the benchmark 10-year note yield past 2.10 percent isn't high by historical terms, it is near the top level this year and the highest since April 2012."

Taken together, conditions have prompted talk that the rally in defensive areas—consumer staples, health care and dividend stocks in general—is getting old and that a move toward underperforming cyclical areas such as energy, which has badly lagged the rally, is poised to take off.

(Read More: Rising Yields May Stifle Boom in Dividend Stocks)

Call it the "rising rate rotation"—a belief that stocks can still make some gains but probably more slowly than earlier this year and with much different leadership.

"Rising bond yields could take some of the steam from dividend yield plays, especially in the staples and health-care areas," said Tobias Levkovich,Citigroup's chief U.S. equity strategist. "Competitive yields might mean that the dividend fascination gets dimmed somewhat, and several groups suffered when 10-year yields climbed in the past."

'via Blog this'