After the worst week for stocks since 2012, and oil falling below $60 a barrel, all eyes will be on this week's Fed meeting. The big question: Will the Fed will raise rates because of an improving U.S. economy, or wait due to falling inflation? While market experts seem to be split on where the Fed is headed, we expect the Fed to start preparing the market for a rate increase by June 2015..
Because this is the last full week of 2014, this should be the last week for active trading this year, so expect some volatility. Watch the 10-Year Treasury, as it approaches a key psychological level of 2.00%, to see if it can hold that level, or whether it breaks support and starts to trade toward the 1.86% intraday low. This would be a bearish signal for credit spreads and high yield bonds.
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