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In case you've been out on the golf course frantically trying to squeeze in those last few rounds before the weather turns, it is safe to say that the direction of interest rates remains the primary driver of the action in the stock market. From a near-term perspective, anyway.

To be sure, there is no shortage of macro issues fighting for space in investors' heads these days. The state of the economy. The earnings season. The Fed's course. Inflation (sticky or not?). The labor market and the resilient consumer. Valuations. AI. COVID (yes, again). The dysfunction in DC. Another war, etc, etc. As such, one really can't be blamed for feeling a little overwhelmed when trying to figure out what the next move in one's portfolio should be.

But make no mistake about it; if you want to know what stocks are going to do next on any given day right now, look no further than a one-minute chart of the yield on the 10-year. If yields are moving up, stocks are almost certainly moving down. And vice versa. It's really that simple. Well, for now, at least.

For example, you might have expected stocks to tank early in the week on the horrific scenes in Israel and Gaza. But what did stocks do on the news of more than 1,000 dead and counting? Oh, that's right, the major indices moved higher on Monday, Tuesday, and Wednesday. Nicely higher.

While Wall Street has never been a puppies and rainbows kinda place, the key here was the action in the bond market. With missiles flying, jets dropping bombs, and tanks/troops moving into position, a typical "flight to safety" occurred in the market as the week began. This meant buying the relative safety of good 'ol US Treasury Bonds. This, of course, pushed yields lower and allowed stock investors, who have been fearful of the rate move getting even more out of hand than it already has, to breathe a sigh of relief.

And what do investors do in mid-October if rates start to move back in line with what might be perceived as "reality?" (Economic reality, that is. You know, the idea that rates should fall as economic growth slows.) You put that cash you've got on the sidelines into stocks so as to be prepared for the traditional year-end move higher. Easy peasy, right?

Except when Uncle Sam - or in this case, Janet Yellen - is trying to sell more bonds than anybody (especially Mr. Yardeni's "bond vigilantes") really wants. As was the case on Thursday. You see, the very minute the latest Treasury auction of $20 billion in 30-year bonds closed and the results were released, that warm-and-fuzzy feeling in the stock market faded. In a BIG hurry.

Yields spiked. The VIX surged. And the machines sold stocks hand over fist. Before you could finish the sandwich on your desk, the Dow had dropped 400 points. What had been a nice shade of green on the screen was now completely red. And that pullback in yields, which had been attributed to the "flight to safety," was nearly erased.

Although stocks managed to get up off the mat into the close, the day still wound up in the red and rates were once again near their highest levels seen since, wait for it... 2007. Super.

So... While the jury is still out on whether stocks can move higher into the end of the year (earnings season might have a say here) and/or whether the current cyclical bull move will roll over anytime soon, at least we know what is driving Ms. Market's mood these days.

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