Market participants seem to be scratching their heads as a major sell off takes hold of Wall St.  The Dow has dropped almost 10 percent from its high in September and is down between 200 and 400 points so far today.  Oil continues to move lower and world markets seem to be either leading the charge lower or following the US market’s lead, depending on how you read the headlines.

While all this is happening, money is flowing into the safety of US Treasury securities.  The end result, bond prices are popping and interest rates are plummeting.  The ten year Treasury bond is hovering around 2.05 percent today after briefly dipping below 2.0 percent.  That’s down from 2.21 percent on Tuesday and 2.42 percent just 15 days ago at the start of the month.  These rates were last seen in early 2013 and the market has not touched these levels since that time.

Market pundits are firing out a variety of reasons for the selloff.  Weak economic numbers, slow growth in Europe and China, Isis, and Ebola worries are all on the list of market fears.  Topics that have been covered several times by

The good news for investors, this is likely to be short lived.  Weaker numbers in the US are not terribly disturbing.  Economic growth is still intact, just not at the crazy 3-5 percent levels many politicians and Fed watchers have been hoping for.  Corporate profits also look to be doing just fine now and into the near future.

The European growth or lack of growth is an issue has been in the headlines for weeks, or months, even years.  Growth questions in China have also been around, with the exception of those economists who appear to believe the statistics that the communist party in China produces.  The drop in oil is a bit puzzling, is it a lack of demand or higher production?  Neither scenario is clearly apparent in the market.  Someone please count the number of tankers that come into the ports of China and we can tell once and for all if demand is up, down, or sideways.

As for Ebola, not likely to spread very far in US with the CDC marshalling their resources to fight its spread and several pharmaceutical companies working on a cure.  Less developed nations are another story.  South America could have trouble along with West Africa as these regions have far fewer resources for monitoring and tracking health issues.

Our bet is that the stock market will rebound.  Oil prices hmmm, not in our comfort zone to guess which way they move.  Interest rates are destined to go higher.  The Fed is off the throttle, QE is dead.  Inflation or lack thereof will keep rates low for a while as will the slow economies of Europe and Asia but, the long term forecast is for slowly rising interest rates.

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