Today Janet Yellen finally relented by increasing the US Federal Reserve’s fed funds rate by 0.25%. This was completely expected with the US 10 year Treasury yield having already moved up sharply after the Trump victory.
Despite all the attention with US Central Bank Policy, historically they have tended to lag what the bond market does.
What took the markets by surprise was that Janet Yellen was much more hawkish than previously and that she now expects at least three more increases in the fed funds rate in 2017.
The weak areas of security markets since the Trump victory continue to be the bond market, high dividend interest sensitive stocks and both gold bullion and gold shares.
My recommendation remains the same. Rotate out of mid and long bonds, interest sensitive stocks and both gold bullion and gold shares into more cyclical areas of the market like financial and industrial stocks.