I just read Bloomberg's post about 30 year treasury bonds's yield increase recently and I thought you might want to read it too. "U.S. 30-Year Yields Rise Most in 14 Months on Inflation Outlook"
http://noir.bloomberg.com/apps/news?pid=20601010&sid=aq54XNlW_rBg
How do you manage your 401K? Well, most people know they should allocate their assets between bonds and equity. And they know as time pass by the weight of bond and equity should be adjusted for more conservativeness. I do think it's still right for most mutual fund investors and who really don't have time to think about what's happening in the market. However, if you want to be a little more active you have to know more about both bonds and equity market.
What I put together here are few graphs about T-bonds yield and S&P 500. The first graph shows the five year time period. The second one covers rough recent three months periods. The last one demonstrates the yield curves for the past few months and corresponding S&P 500 value.
Recently before September the 10 year yield has a pretty good positive correlation with S&P500. When you think about people with mutual funds shuffle their money out of equity to bonds it would make sense for you. However, after the first week of September, when Feds' Biege Book was out (9/8) and further confirmation from FOMC rate decision meeting came out for Quantitative Easing 2 (QE2) you can see both stock market and bond market started booming. Investors are just very happy about the potential of Fed print more money. And for past few days, the bond yield starts to go back up (price falls) and it seems that fear of the inflation risk kicks in, especially after Friday's better than expected retail sales growth and Thursday's higher Producer Price Index (PPI).
Now despite the low yield rate, the yield curve is in its normal shape. To see some crazy yield curves, go to the next link. http://www.stockcharts.com/charts/YieldCurve.html (move the red line on S&P500 to see updated yield curve)
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