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Ben Carlson

Markets Defy Finance Theory on Fed Hikes

Rising rates often don't mean trouble for stocks.
Signals.

Signals.

Photographer: Joshua Lott/Getty Images

Last week, Federal Reserve Chair Janet Yellen gave a strong hint that the central bank would be raising rates at the Open Market Committee meeting in mid-March. “We currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect,” she said in a speech in Chicago.

Investors seem to believe that economic data is giving the Fed the green light based on the implied probabilities for a rate hike.