The Market's Response to the Fed Will Be Telling

The Federal Reserve is widely expected to raise interest rates again at their meeting next week. They obviously view the recent cyclical upturn as being durable and the inflation data as pointing to the need for higher rates. Our market based indicators agree somewhat but nominal and real interest rates are still below their mid-December peaks so I don't think a lot has changed. More interesting will be how the markets react after the Fed does what everyone expects it to do. I suspect we will soon be hearing – again – about the conundrum of long term interest rates.