The main story of the past week has been the upside breakout in U.S. Treasury bond yields to the highest level in thirteen months, and the corresponding drop in bond prices. The jump in bond yields during the month of May contributed to heavy selling of dividend paying stocks -- mainly telecom, utilities, and REITS. The ripple effects of the jump in U.S. bond yields extends to foreign markets as well-- emerging markets in particular. Chart 1 shows Emerging Market iShares (EEM) dropping sharply during May (-3.8%). The biggest emerging market losers during 2013 have been countries tied to commodities. Since the start of 2013, Brazil and Russia (which export commodities) lost -9% and -15% respectively. China (the world's biggest importer of commodities) lost -10%. [The EEM has lost -7% during 2013, while EAFE iShares (developed markets) and the S&P 500 rise 5% and 15% respectively]. During those five months, commodity prices fell -4% while the U.S. Dollar Index gained 4%. The rising dollar has been a side-effect of expectations for higher U.S. rates. While the rest of the world is still easing (or just starting to), expectations are building that the U.S. is tapering its quantitative easing program. The stronger dollar has also had a direct negative effect on emerging market currencies, and an indirect negative impact on emerging market bonds.