With soft demand for today's 30-year bond auction with yield to maturies coming in higher than expected, TLT has seen a massive move down (see chart below). I have talked previously about bonds not following the its normal historical relationships with stocks and commodities (inverse) and the US dollar (positive correlation). It seems as though bonds were rising only due to 1) too much liquidity finding higher yields than what money market is providing and 2) skepticism of the current equity and commodities market rally. It looks like bond investors are giving in to the pressures of a falling dollar and rising commodities and stocks. I don't have to tell you this over and over, but inflation is clearly in play.