Less then three hours till the closing bell, and Citigroup (NYSE:C) is down 0.32% for the day but up 5.71% for the week. The story is similar for the rest of the Big Four banks and for the broader markets, as well. We seem to be at the start of yet another market correction. Let's hope it's a mild one.

Two weeks of tumult
A week and a half ago, Federal Reserve chairman Ben Bernanke announced that quantitative easing might start being tapered back later this year if U.S. economic data continued trending positively. Investors around the world ignored the "might" and the "if" in Bernanke's statement and instead assumed the worst, sending markets crashing last Thursday and Friday. But beginning Monday, U.S. markets came back strongly, until today.

To add gasoline to the global-markets fire, a crackdown on China's shadow-banking sector sparked fears of a credit crunch in China. A hawkish statement by the country's central bank didn't help matters, and the People's Bank of China quickly changed its tune, promising to backstop any Chinese bank experiencing a cash shortfall.

Foolish bottom line
Today's market correction may have been the result of perceived weakness in Europe as well as an uptick in Treasury yields, the latter of which directly affects the bond markets.

You see, Ben Bernanke's announcement didn't just affect equity markets: Commodities markets and the bond markets were thrown into a tizzy as well. And it's bond markets more so than stock markets that can cause existential threats to the economy. In 2008, it was defaulting mortgage-backed securities that touched off the financial crisis, which then sent stock markets crashing.

Speaking of which, it was theorized by many analysts, including yours truly, that the stock market sell-off we saw following Bernanke's statement may have been the popping of a bubble that had formed, fueled by four years of easy Fed money. But now it looks like what was lost has been gained back, and then some:

  • Citi lost 5.01% last week, and has made back 5.71% so far this week.
  • Bank of America (NYSE:BAC) lost 2.99% last week, and has returned 4.94% so far this week.
  • JPMorgan Chase (NYSE:JPM) lost 2.25% last week, and has returned 4.87% so far this week.

So if there was a bubble, it's reformed, and potentially gotten even bigger. Or maybe there never was a bubble. But it's hard to make sense of the generally high levels of stock market enthusiasm we've seen over the last six months based on economic data alone. Yes, the country is performing fine: Unemployment is down, and GDP is solid, at least compared to the rest of the world's. But none of the numbers justify the stock market hitting high after high the way it has been.

The Foolish bottom line? The markets are just plain volatile right now. They were before Bernanke's statement and the Chinese banking mini-crisis, and they will continue to be a for a long time to come. Citigroup is riding that wave, along with everyone else. With any luck, today's correction will be a mild one, and investors will continue to hold onto the gains they've made this week. But don't count on it. 

Fool contributor John Grgurich owns shares of Citigroup and JPMorgan Chase. Follow John's dispatches from the not-so-muddy trenches of high-finance and big-banking on Twitter @TMFGrgurich.

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