Bonds had a rotten day, primarily because stocks had an amazing day (although the terrible 5yr Treasury auction didn’t help). In turn, stocks primarily had an amazing day because they had a rotten day on Monday. Looked at another way, in week-over-week terms, the SP is roughly 2% higher right now–something that has happened to 1 in 4 weeks in 2018.
Caveats aside, and holiday trading realities notwithstanding, there are a few reasons to be cautious about this particular move. First off, in outright terms (not percentages), today’s stock gains were the best ever (Dow, SP). Volume was nearly as high as last Wednesday’s Fed day. That suggests some investors may be lurking and waiting to get back on-board with stocks as soon as they sense the Q4-2018 dip is over.
Beyond that, bonds have had their best 2 months in more than 2 years. It’s highly uncommon for 2 such months to be followed by gains in the 3rd month. I think change to “new year trading” only makes that a bigger risk.