Long term interest rates are beginning to climb again. The following is a chart of the 10-year US treasury note:
Rates touched 4% early in April 2010.
The Canadian 10-year bond is exhibiting the same characteristic, with yields up roughly 0.2% over the past week. Fixed income is being sold off and presumably rotated into equities and commodities.
Long term interest rate changes are a crucial variable concerning the pricing of equities and corporate debt simply because they are considered to be a risk-free comparison. With long bond yields rising, fixed rate mortgages will also become more expensive. Right now the best 5-year fixed rate you can obtain is around 3.65%, but this will likely be rising by a quarter point or so in the near future.
The only real defence against sharply increasing interest rates is holding cash or short-duration securities – almost everything else, including gold, will get hammered.