Higher Interest Rates Just An Excuse To Take Profits

The market is lower once again this morning, after the ECB raised interest rates in Europe. They raised their benchmark rate to 4.00%, which is still well below the 5.25% fed funds rate in the U.S. Also, Morgan Stanley issued a strong sell rating on European equities, helping push those markets to greater than 1.0% losses.

The yield on the 10-year note here in the U.S. is approaching 5.0%, a level it last reached back in August 2006. But this 5.0% level is still below our fed funds rate. So it isn't a level that is going to choke earnings growth of GDP in our economy.

Rather, it is just a convenient excuse to take some money off the table after what has been an extraordinary run following the March correction. And seasonally speaking, the market often has difficutly making significant headway as the summer begins.