The markets continued with their pattern of robust growth this week, with the Dow up 2.12%, the S&P 1.43% and the NASDAQ 1.15%.  GDP data for last quarter was revised downward, as expected. Initial job losses continued to decline. The market responded favorably.

Recently, there has been a steepening of the yield curve.  That is, the yield for long-term bonds is higher than that of short-term bonds. There are two potential reasons for this steepening: the market may be signaling that that the economy is strengthening, or that inflation is coming and thus there is little demand for bonds. We suspect that it is some of both.  We have been calling for a rising interest rate environment for some time.  We may have been a bit early, but it seems to have been a correct prediction.

Next week, there will be very little data due to the Easter break. We hope to see the market continue its steady incline.