NEW YORK (TheStreet) -- The rising U.S. yield curve and the diminishing price of gold is an intermarket relationship that has had a strong correlation the past few months.The goal of quantitative easing was to lower both short term and long term rates in order to stimulate investment and deter saving. The plan went along smoothly until whispers of an end to the Federal Reserve's bond buying program surfaced in May. The yield curve has since spiked higher off of its lows and started an uptrend, leaving the carnage of the long bond in its path. The chart below is of iShares Barclays 1-3 Year Treasury Bond ( SHY) over iShares Barclays 20+ Year Treasury Bond ( TLT). This pair is a graphical representation of the U.S. yield curve. As the pair moves higher, long dated bonds underperform shorter term bonds leading to a quicker rise in long term yields. As an end to quantitative easing has become a reality this pair has normalized and traded at elevated levels justified by economic data. The U.S. economic recovery remains gradual, but the outlook continues to improve which means an eventual end to accommodative policy.
Eventually the spike in rates should elicit a bid in the U.S. dollar and the possibility of a downward correction in world equities.
At the time of publication the author had no position in any of the stocks mentioned. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.