The Fed did raise rates as expected but limited further moves to 50 basis points.

Capital markets are always driven by one of three emotions. It is either greed (an overpriced market), fear (an underpriced market) or apathy (fair value). These emotions are a function of investors’ views of the future economic fundamentals. Currently, the bond market is being driven by fear. The fear of inflation remaining much higher for a much longer period has driven yields higher much sooner than we have been forecasting. The yield on the ten-year treasury has moved above 3.1% as of this morning. We had not been expecting this level until late this year. The curve has steepened with the spread between the yield on the two-year and ten-year widening to 48 basis points from the inverted curve experienced in March.