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The Business Monthly – A Bond Market Bubble in the Making?

Since the Great Recession of 2008, writes Christopher P. Parr, the Federal Reserve reduced, and then held, short-term interest rates at virtually 0% in an attempt to combat a global financial crisis and stimulate the U.S. economy.

The U.S. economy, no longer in crisis mode, has been experiencing steady, consistent low-to-moderate growth. As the economy becomes healthier, it becomes necessary and desired for the Federal Reserve to begin to raise interest rates gradually, toward a more normal, long-term economically “neutral” level of perhaps 3.50%.

Bonds can effectively be used to diversify a portfolio, reduce risk and actually enhance returns under volatile stock market conditions. When interest rates rise, however, the prices of existing, lower-yielding bonds fall because investors can simply purchase newly-issued bonds at higher, current interest rates.

To read the complete article by Chris Parr, Click Here.

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Baltimore Sun – Wall Street Shrugs Off Sequester

Christopher P. Parr, when interviewed by Baltimore Sun columnist Eileen Ambrose on whether Wall Street ignoring political drama in Washington is the new norm, said “Wall Street has gotten ahead of the game.”

“Sure, there are positive signs, Parr said, but the economy’s annual growth rate will be cut by at least half a percentage point once the sequester cuts are in force. That’s significant, given the current modest growth rate,” he said.

“I’m more worried about: Is this the time to dump fresh money into the market?”