A whiff of fear in the air?

I'm not at work today -- someone has to watch the two kiddos while my wife and her coworkers spend the day at a bonding function! But that doesn't mean I'm not keeping one spare eye on the market. And I have to tell you, it smells like there's some real fear permeating the market air late today.

The stock market has suffered a dramatic reversal intraday, with brokers leading the charge lower.

Yet another mortgage firm, this time American Home Mortgage, warned of large losses related to poorly performing mortgages.

The federal banking regulators are tightening the screws (belatedly, but that's besides the point) on subprime mortgage lenders.

And Bloomberg really came out, guns blazing, in this story about the ratings agencies being behind the curve when it comes to downgrading mortgage bonds and CDOs.

Is the cumulative weight of this stuff finally getting traders down? Is it completely unrelated -- and instead a symptom of today's news out of London about potential terrorist attacks? I just don't know. What I do know is that market measures of fear and volatility have been rising, and that it could (emphasis on "could") signal a real change in tone for the capital markets. Needless to say, if there is some kind of market panic, my call for lower bond prices and higher bond yields will likely prove wrong, at least in the short-term, as flight-to-quality purchases outweigh everything else.