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Bond Market Sends Fed All-Clear to Raise Interest Rates

  • Investors accept Yellen's plan for gradual, data-driven policy
  • Big differences from central-bank tightenings in 2004, 1999
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Fed's Williams: Rate Hike 'This Year' If Risks Dissipate

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Janet Yellen has the fixed-income market just where she wants it: ripe for the first increase in U.S. interest rates since 2006.

Just about every indicator is telling the Federal Reserve Chair a move at next week’s policy meeting would cause government bonds little disruption. Her guidance has money markets pricing an extraordinarily slow pace of tightening, volatility metrics show no signs of panic, and forwards indicate benchmark rates will remain contained. Differences between shorter- and longer-term yields are flashing a positive signal for the economy.