The yield on the 10-year Treasury note (^TNX) hit a new low for the year, sinking as low as 2.43% Wednesday, its lowest level since June 2013. In a phenomenon that has surprised many on Wall Street this year, money is rushing into Treasurys even as stocks hover near multi-year or all-time highs.

Yahoo Finance Senior Columnist Michael Santoli says the flood of money into bonds is a global phenomenon and that as low as yields have fallen in the United States, they’re still better than much of the world. “If I want to give you a list of the countries whose 10-year debt trades at lower yields than the United States, it’s almost all the developed world,” said Santoli, highlighting that the United Kingdom, Canada and Germany are among the countries with lower yields than U.S. debt right now. “Globally, there’s a scarcity of yield.”

Investors “caught unawares”

“The reason that I think you’ve had this persistent rally is so many people were caught kind of unawares or wrong-footed” with a lot of institutional money betting against bonds, according to Santoli. “Pension managers had a 30% up year in stocks last year. They’re fully-funded and - guess what – they now have to rotate out of stocks into bonds… to lock in longer-term yields.” That rotation has created consistent demand for the longer-term safety of bonds.

Despite the rally, some big investors have yet to change their outlook for Treasuries. “Coming into this week, hedge funds were still net short the 10-year note in the futures markets on an aggregate basis, so they haven’t yet quite capitulated and so to me, that’s the story.”

Economy going off the rails?

Yahoo Finance Editor-in-Chief Aaron Task says some market watchers are reading the rally in the bond market as a sign the economy is about to take a turn for the worse. “Some people are painting a picture to say: Well, the bond market is telling you that the economy is going off the rails and that it wasn’t about the weather in the first quarter.” But Santoli doesn’t ascribe to that view.

“I don’t think it’s going off the rails. I do think the bond market’s saying they don’t see a great risk of rapid acceleration in the economy,” he said. “So, if you believe that that’s priced into stock earnings forecasts right now, that could be a problem for stocks if in fact the bond market is right about that.”

Santoli doesn’t think the bond market is right about that. “I think slow and steady growth is pretty much a warm bath for stock prices as well, so that’s why they’ve been managing to hold up at these levels.