When the Federal Reserve announced a second round of quantitative easing (QE2) in early November their goal was to lower long-term interest rates to help further boost the economy. However, we’ve seen the exact opposite effect in the market. Interest rates on a wide variety of bonds have been rising over the past month. Why? The reason rates have been increasing is because the economy continues to improve, investors now have a greater appetite for risk, the US tax compromise deal working its way through Congress, and because of concern that inflation will increase as a result of QE2.