It’s all about employment. The market is extremely focused on this Friday’s payroll numbers. This focus is on the payroll because it will dictate what the Fed should do with interest rates. This week, the 10yr treasury yield climbed from 1.53% to 1.68%, meaning the markets think the Fed is finally ready to raise rates. Some market pundits are calling for a yield of 2% on the 10yr treasury by year end, however we do not see it happening that quickly. If the numbers come in stronger than expected, it will likely cause the Fed to raise rates by the end of the year. This would clearly be a negative for bond holders, and should put downward pressure on stock prices. If the numbers do not exceed expectations, then the artificially low 10yr treasury yield will most likely trade in a narrow range. In either case, the valuations are full.