June is when spring turns to summer, but this year it’s felt like fall for investors in nearly every market.

Bonds have tumbled in value, from Treasuries to corporate debt to municipals, as the focus on a possible end to the Federal Reserve's asset-buying prompted heavy withdrawals from fixed-income funds. Gold is collapsing and is on its way to posting the metal’s worst quarter on record. Non-shiny commodities have also been weak. Emerging markets have led the declines, as China’s banking system heaves. Stocks are down from their highs of May, though they’ve bounced the past couple of days.

This recent across-the-waterfront swamping of most every investment market raises two key questions: Where is the money that is exiting these assets going? And what happened to the balanced interplay among markets that produced offsetting movements and flattered a diversified portfolio?

The question of where the money is going is far more complicated than it sounds. While it’s common to

Ben Bernanke is not the first Federal Reserve chairman to send a message that investors took as unduly hostile, thwarting a strong stock-market rally even as a financial storm brewed in Asian emerging markets.

In early 1997, deeming the U.S. economy on a sturdy growth course, Fed Chairman Alan Greenspan surprised the market with a quarter-point boost in short-term interest rates – despite inflation levels that the Wall Street Journal editorial page said required “a microscope” to see.

When Greenspan acted in March 1997 – just a few months after his famous musings about how to diagnose “irrational exuberance” in financial markets – the Standard & Poor’s 500 index had been on a roll, having gained 21% over the prior six months. Investors threw a bit of a fit at having Greenspan disturb their party, dropping the stock benchmark by 6.7% over a few weeks before it rebounded to surge powerfully to new highs through July.

This Fed-induced gut check didn’t do much lasting damage for a couple

The recent cloudburst of higher interest rates has turned world stock and bond markets soggy with fears of an economic slowdown and swamped bond portfolios. Yet, off to the side, a small group of companies stand sheltered and smirking, comfortable beneficiaries of the approaching prospect of higher rates and jumpy bond markets.

Discount brokerage firms, derivatives exchanges and managers of money-market funds have lured the investor cash fleeing more traditional financial stocks, whose businesses could take at least an initial hit with the recent lift in interest rates and any more that could come.

Since the start of May, when Treasury yields bottomed and started rising, shares of discount brokers Charles Schwab Corp. (SCHW) and TD Ameritrade Holding Corp. (AMTD), futures exchange CME Group Inc. (CME) and money-market asset manager Federated Investors Inc. (FII) have each soared between 15% and 27%, compared with a flat Standard Poor’s 500 and broader finance-stock sector.

Last week,

Only a few days ago, the leading Wall Street debate was whether central banks had too much control over the financial markets. Suddenly, the nagging notion is whether central banks are losing, or surrendering, control.

Since Federal Reserve Chairman Ben Bernanke on Wednesday set out the likelihood of curtailed “quantitative-easing” bond purchases late this year, interest rates have shot higher, with the 10-year Treasury yield surging above 2.5% Friday from 2.17% before he spoke, sparking a 560-point tumble in the Dow Jones Industrial Average in two days.

This is popularly viewed as a simple re-pricing of bonds in anticipation of the Fed backing away from its current $85 billion monthly purchase of Treasury and mortgage debt. Yet, it’s not clear the Fed wished for rates to whistle higher at this pace, given all of Bernanke’s caveats that economic data alone will steer his course.

After the Fed meeting, Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch,

The New Normal is so last year; the New Abnormal is here.

At least that’s how it seems based on how often this phrase is being applied to trends and phenomena that appear jarring or strange but which – the coiners suggest – we'd better get used to.

The New Normal, of course, was a phrase propagated by bond-investing giant Pimco beginning in April 2009 to describe a long, painful economic convalescence period it foresaw, characterized by stubbornly slow economic growth and persistently high unemployment in an aging world carrying too much debt.

And so it happened: The U.S. recovery has steadily fallen short of hopes and official forecasts, surpassing a 3% pace in only three separate quarters since 2008. Treasury rates – near 3% and rising when Pimco christened the New Normal – have stayed so low, due to sluggish growth and massive central-bank bond buying, that the recent pop to 2.2% from 1.7% has unsettled investors.

A stale status quo

This New Normal rubric has done such a good job

A first step in treating post-traumatic stress disorder is to compile a “hierarchy of fears” to be surmounted, from the least scary to most terrifying. Investors have undergone their share of financial trauma over the past five years, and remain twitchy with flashbacks. In the past month, especially, alternating and confusingly contradictory worries have come as world stock and bond markets struggle to assess potential threats.

There are two principal Big Fears, which have waxed and waned in various combinations this year.

First, that global economic growth – already negative in Europe, slowing in China and sagging in most emerging economies – will weaken further. The second is the worry that the Federal Reserve will soon curtail its volume of “quantitative easing” asset purchases, diminishing one force – both perceived and actual – compressing interest rates and supporting financial markets.

Here, in order from least to most scary, is how the various investor fear pairings stack up,

It’s time to worry about the bond market.

This isn’t an investment call tied to familiar concerns over Federal Reserve actions, possible higher interest rates or rising inflation.

Rather, investors should worry about a less-discussed reality: The structure of the bond market itself is balky and vulnerable to bouts of exacerbated investor losses and trading air pockets, simply because the act of trading corporate bonds among funds and banks has become tougher and less-efficient since the financial crisis.

Even as companies have taken advantage of all-time-low rates to issue record amounts of debt gobbled up by yield-starved investors, trading volume in bonds has lagged and the market is too unsteady to absorb any bouts of heavy selling without outsized volatility.

A bronze bond market

The issue is one of financial plumbing, a system lacking the valves, seals and pipe strength to handle the pressure of a bond-market downturn. As Vincent Gardenia’s plumbing contractor in the film

From Wall Street to the mall, Sears Holdings Inc. (SHLD) might be the most hated major American company.

While still huge, with more than 2,500 Sears and Kmart stores and nearly $40 billion in annual sales, the company is decades past its prime, trapped in too many faded downtowns and first-generation malls, shrinking rather than growing.

Sears Roebuck, as the company used to be known, was the Amazon.com (AMZN) of its day, thanks to its comprehensive mail-order catalog and early expansion across fast-growing postwar suburbs. Sears was once so powerful that it built and anchored the largest skyscraper in the country in Chicago (now the Willis Tower).

Yet public affection for storied store brands often doesn't survive generational shifts, and Sears has been largely rejected by today’s shoppers in favor of newer chains with larger formats and better pricing, from Target Corp. (TGT) to Home Depot Inc. (HD) to Kohl’s Corp. (KSS)

A bad report card

Sears consistently receives among the