Behind Market Turmoil, Potentially Good News
Interest rates are far below historical definitions of normal. Optimistic analysts believe the economy could have years left to run.
President Trump has put the Federal Reserve at the middle of the latest drop in the markets, saying the "Fed has gone crazy." WSJ global economics editor Jon Hilsenrath explores three reasons why the Fed is raising interest rates. Photo: Getty Images.
Bond yields are a barometer of where investors think growth and inflation are going—which, for much of the last decade, has been nowhere fast. In that sense, the recent run-up in long-term interest rates that has rattled the stock market this week is good news. With both growth and inflation looking much healthier, the Federal Reserve and investors have concluded that interest rates also need to return to more normal levels.
If all goes according to plan, the stock market selloff will prove to be a temporary bout of indigestion.
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