US Interest Rates May Go Up By A Full 1% This Year!

So say some analysts, following new US Federal Reserve Chairman Powell's first testimony to the House Financial Services Committee. His "personal outlook for the economy has strengthened since December".

As we suggested on our weekly video, there is plenty of economic data coming at us this week and today the Conference Board suggested that the US Consumer is the most confident that they have been since 2000!

Interestingly, the US consumer is also facing record debt levels: 

And if interest rates go up, that is going to have an impact on their ability to service that debt. Which may also impact their spending (and the consumer is 2/3 of the US economy). At the moment, however, it appears that the tax cut euphoria is winning the day and giving hope that incomes will experience a an up-tick to assist in covering the higher costs of household debt. We shall see.

Meanwhile, both stock and bond markets reacted with selling and correlations look like, for the moment, that they are not necessarily providing protective cover.

While the stock market up-trend from 2009 remains intact until the S&P 500 breaches the lower trend-line at about 2250,

The higher levels of volatility in financial markets and the prospect of higher interest rates (and less liquidity in the financial system) may give pause to those that are still bullish of equity markets this late in the cycle. 

Risk is at its highest levels when prices are at their highest levels. This is meaningful to us at High Rock.