Updated from 5:03 p.m. EDT

Ironically, with the whiff of the bubble wafting from OSI Pharmaceuticals ( OSIP) and Google, this week was a tough one for the bulls.

Hurt by a shocking disappointment from Nortel ( NT), tech stocks led the market's retreat, with the Nasdaq Composite falling 6.2% for the week while the Dow Jones Industrial Average slid 2.3% and the S&P 500 lost 2.9%.

But in a week in which the "hot money" got singed on several fronts, commodities (save oil) also got hit following comments from Chinese officials about cooling off their economy, and emerging market debt tumbled. Treasury prices weakened as well, with the yield on the benchmark 10-year note climbing above 4.50% for the first time since September.

Underscoring the action was more evidence -- namely from the first-quarter GDP report -- that the economy is growing and inflationary pressures building, meaning the end of the Federal Reserve's easy-money policy is nigh. That, in turn, is prompting money mavens to reassess their exposure.

"What you're seeing is the unwind of leveraged bets with a capital 'U'," said Mark Dow, co-manager of the ( MEDIX) MFS Emerging Markets Debt fund. "The fundamentals look great, but the rally was liquidity-driven, at least in the amplitude of the rise, and some of that has to be unwound. No one is talking anymore about a liquidity-driven market."

Dow described a scenario in which money managers were able to borrow at the 1% fed funds rate (or slightly higher) and then buy emerging-market debt paper yielding 10%. "Now, we're closer to the inflection point of Fed tightening and there's an unwinding of risk," he said. "Guys are saying 'We're in a new environment, the wind is in our faces. We have to get back to flat posture and see how we're going to make money in the new environment.' That's what we're seeing."

Dow was speaking specifically about the emerging market-debt arena, where Brazilian bonds were rattled this week, and, to a lesser extent, high-yield debt. But, rest assured, the same scenario is playing out in other asset classes, equities definitely included. (It's worth recalling that emerging markets often presage action in stocks and Treasuries, as was the case in 1994 and 1997-98.)

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