We have been saying, for many months now, that the more markets try to second guess the Federal Reserve (Fed) and push longer-term interest rates down, the higher would be the probability that the Fed would continue to increase the federal funds rate. What happened with the release of the Survey of Economic Projections (SEP) was just that. Since the Fed has not been able to convince markets that longer-term interest rates need to be higher – and for longer – the only recourse the Fed has is to increase the only interest rate it controls, the federal funds rate, in order to push longer-term interest rates higher. ... (full story)