In the last couple of days the 10 year treasury yield sold off rather dramatically, finally reaching a yield of 2.85 today. While many were expecting longer rates to rise gradually, the pace of this move has spooked bond and equity investors. Here is the good news: the economy is doing well and all indications point to continued growth. Job growth is steady and strong and wage increases have risen at the fastest year over year growth of 2.9% since 2008. All that should alleviate any true panic. However, markets are overvalued and a healthy pullback is positive. What is important to focus on? There is no sign of recession and one week’s market action should not deter investors from long-term goals. We believe, if there is an additional downside after this week, it could be a better point to add capital.
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