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Given the increased central bank rhetoric about keeping interest rates ‘higher for longer’, the sharp rally in stocks and bonds in January did seem somewhat overdone and reflecting too optimistic an outlook and was perhaps just a ‘counter-trend bounce’ following the substantial weakness in markets in 2022. That scenario became the case in February as stocks gave back much of their January gains while bonds gave back all of those gains. With central banks determined to eradicate inflation, the continued strong economic data so far this year just meant that interest rates will have to rise even higher than expected and stay at those levels longer. That is not good news for stocks! (more…)