WHEN WILL THE FED RAISE RATES?

In today's WSJ Market Watch, the view is that when the Fed's start to raise rates, reaction in the bond market will dramatically swing or worsen interest rates.


"Don't fight the Fed" has been a market mantra for the past four years. But some bond investors are starting to lace on their gloves.

MarketWatch's Laura Mandaro looks at prominent investors who think the market will keep rising and those who think it's ready to fall and what metrics they're using to make their investment calls.

Richard E. Sylla, financial historian and professor of economics at NYU's Stern School of Business, discusses the likelihood of a series of markets highs, the impact of the Fed's ability to keep interest rates down, and the tendency for investors to buy high and sell low, in a big interview with WSJ's Jason Zweig.

Figuring that the Federal Reserve won't be able to keep a lid on interest rates forever, large money managers such as BlackRock Inc., BLK -0.43%TCW Group Inc. and Pacific Investment Management Co. are getting ready for the day when rates take their first turn higher.

Upbeat news about employment Friday has helped stoke expectations that the economy is continuing to recover.

The fear is that as expectations of rate increases mount, short-term investors will bolt for the exits as prices drop, causing wild price swings and amplifying losses. The last such exodus took place in 1994, when Fed rate increases triggered a wave of selling that left 30-year bond prices down almost 24% in a year.