Stock investors are beginning to brace for a rate rise.  The combination of a good jobs report, bond market volatility, and the specter of rate increases contributes to stocks and bonds coming under pressure.  What’s good for the economy isn’t necessarily good for stock and bond investors.

This is what a good jobs report looks like.  280,000 jobs were created in May.  The unemployment rate stands at 5.5%.  Labor force participation ticked up.  Average hourly earnings increased. The case for Federal Reserve rate hikes in September is strengthening.  CBS MarketWatch reports reactions from a number of sources.

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The bond market has been volatile in the extreme.  The main problem is liquidity—the ability to buy and sell in the market without affecting an asset’s price.  Trading activity is declining because of increased banking regulations put in place following the financial crisis—an unintended consequence of reform. Consequently, interest rates have risen dramatically over a short time period.  Bloomberg Business explains.

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Stock investors brace for Fed rate rise.  Stocks fell again last week.  With sharp increases in bond yields and economic data pointing to interest rate increases from the Federal Reserve, stocks that have benefited from low rates come under pressure, according to the Financial Times.

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