More evidence that the bond vigilantes are staging a coup in the pits.

The New York Fed’s “primary dealers” – the 22 largest broker-dealers in the US through which the Fed interacts with the markets – have slashed their holdings of Treasuries from a record $146 billion in October 2013 to just $30.3 billion in June.

The primary dealers or large Wall St banks, which trade with the NY Fed on debt offerings, have slashed their holdings, not because of provisions in Dodd/Frank, but to cut risk in their own portfolios.

On Monday the Dow Jones index went negative for the year. The other two indices –– S&P 500 and Nasdaq –– are just up more than 1% YTD.

So where is all this cash going? It’s out of equities, its leaving sovereign bonds, with yield rising to near 2.4% on the 10-year note after hitting a new low in Oct. of 1.6% .

Corporate bond offerings look a little like subprime paper in 2006. There is a rush to funding in the market, with defaults growing quickly in the last few weeks.

Where is money being treated the best?

A case could be made for tangible assets. Real estate has risen slightly, gold is holding a bid, oil is bouncing back and the dollar is still strong.

Is cash a good holding. There’s no inflation to speak of and a case could be made of a deflationary whiff in the air.

Why buy today when prices fall — or value of the dollar rises. When the two move in opposite directions, that’s deflation. And it could explain part of the retailers spiraling down of sales.