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"...as long as stocks are hot we can expect pressure on rates to inch upward."

 

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Make no mistake about it, bonds got beat up this week. Rates increased overall by 0.125%, and we are still working towards clarity of whether or not momentum for an additional increase will continue. Several factors are making a contribution at the moment, most notably is the soaring stock market. The DOW is experiencing one of the strongest rally’s to begin a new year in recent memory. Will it continue? Nobody knows for sure, but as long as stocks are hot we can expect pressure on rates to inch upward. Another consideration for this movement can be directed towards an emotional reaction to headline news. Earlier this week there was an article published citing the possibility of China no longer continuing to buy our bonds. In the grand scheme of things, for some time now China has not been buying a significant amount of our bonds when compared to the magnitude of overall availability in the marketplace. Hang on to your hats for now, more guidance next week will make itself available to better understand if the upward trajectory of rates will continue.