The terms of the debate have shifted. The issue now is when does the Fed hike rates next year. And further, how will the U.S. stock and bond market respond. This Great Graphic appeared in the Wall Street Journal, and was tweeted by Pedro da Costa. It shows the past three Fed tightening cycles and the performance of US 10-year yields and the S&P 500. While a pattern in the bond market is more difficult to detect, the stock market has advanced. The relationship may not be causal as much as the considerations that lead the Fed to raise rates also spur investors to boost valuations--i.e., strengthening economy.
