A month ago, the augments against another round of Federal Reserve rate increases were formidable: Slow economic growth in China, negative interest rates in Europe, a soaring U.S. dollar, weak commodity prices, and falling global stock prices.

Odds of another federal funds rate increase were low. Indeed, traders were giving no more than single-digits odds for another rate increase before June.

After a couple weeks of strong performance in the global financial markets, the odds for a June increase are on the rise. Today, traders are betting for a 30% chance of another rate increase by June. Those arguments that seemed so impenetrable a month ago seem less impenetrable today. This means the Fed will be less hesitant to raise the fed funds rate.

Of course, the Fed can raise the fed funds rates and mortgage rates could fall, which we saw after the Fed raised the fed funds rate in December. But when the Fed raises rates again, it will likely be backed by firmer financial-asset prices and stronger economic growth. Inflation will also likely be more prevalent. The market will be less inclined to move against the Fed.

To be sure, a couple weeks of solid financial-market performance and firming asset prices doesn't make a trend. It's worth highlighting, though, that if current advances hold, then there's a good chance we could see 4% on the 30-year loan sooner than later.  Yes, everything occurring today could be gone tomorrow, but it can be risky to bet that way.

 Information provided by Jessica Regan.

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