The Federal Reserve just reported that inflation exceeded their 2% target for the first time in five years and the University of Michigan reported their inflationary expectations have now risen to 2.7%.

First, in order to compensate for the diminishment of purchasing power that usually accompanies rising inflation, investors normally have demanded higher interest rates on their investment assets. This was particularly true in the 1977-81 era when inflation soared to almost 20% and interest rates rose to roughly the same level.