Tuesday was a disturbing day on Wall Street, says one expert.

How bad could a day when the S&P 500 SPX ended less than 0.2% lower really be?

Rich Privorotsky, head of Delta One trading at Goldman Sachs, called it "one of the more disturbing cross-asset days of this episode."

While semiconductor stocks SOX ended narrowly higher - helped by a report TSMC may expand further into the U.S., into the Dallas, Tex. area - credit widened, and long-dated Treasury yields rose even as oil prices fell (CL00).

The State Street SPDR Bloomberg High-Yield Bond ETF JNK has dropped five days in a row.

Privorotsky speculated on a few reasons why. The carry trade - when people borrow in low-yielding currencies to invest elsewhere - may be unwound as the yen (USDJPY) appreciates, he said. Extreme volatility in the rates space may leave Wall Street firms either unwilling or unable to intermediate.

"Whatever the mechanism, real rates are very high. At some point that is simply the clearing price for fiscally dominant economies trying to attract enough private capital to fund enormous sovereign borrowing," he says.

And once these rates are high enough, the hurdle rate for equities rises materially.

"Equities have absorbed an enormous amount remarkably well, but I need rates to calm, credit to stop widening and a more definitive energy solution before taking nets up here," he said, referring to increasing exposure to stocks.

-Steve Goldstein