As noted in all of our recent analysis, the fundamental backdrop was just not consistent with any orderly push higher in U.S. interest rates triggering a sharp reversal of the U.S. equities' major bull trend. Of course, that still meant after the U.S. 10-year T-note yield swung above its 2.62% four-year high back on Jan. 19 (incidentally the same day as our Showdown at Govvies Graveyard post) the higher interest rates might disrupt the U.S. equities’ runaway upside (parabolic rally) psychology.
The sell-off that followed the positive January employment report on Friday should not have been a surprise. It was the typical market reaction to strong economic news during the early stages (relatively speaking) of a tightening cycle. Positive economic news could be inflationary and push the Federal Reserve into a more aggressive tightening phase.