Remember the loud chorus of market forecasters and advisors predicting bond market chaos following the hotly anticipated move by the Fed to boost short-term interest rates?

Perhaps akin to the expected Y2K crisis that wasn’t, the bond market did virtually nothing in the immediate aftermath. In the hours following the Fed’s move to take the federal funds rate a high-percentage-point higher to between 0.25% and 0.5%, the 10-year Treasury note did tick up by two basis points, but actually declined by a basis point from its level just before the 2 p.m. announcement on Dec. 16. Since then, intermediate-term bond rates – which of course are set by the markets rather than the Fed – have declined.

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