Stock markets continue to head lower this morning. Certainly one of the catalysts is the prospects for higher interest rates. The Federal Funds rate was pushed downward beginning in the third quarter of 2000 and has been held down at 1% for the last year (see chart). On the other hand, the bond market indicates that interest rates are heading higher. For example the rate on the 10 year government bond is now higher than it has been since the third quarter of 2002 (see chart).
Stocks continue down
