The bond market roared into new territory this week, causing Treasury yields to rise and equities to drop as investors digested economic growth that is pushing interest rates higher.

Yields on the 10 Year US Treasury, a widely followed benchmark followed closely by mortgage rates, shot above 3.22 percent through Friday morning, its highest point in more than seven years. The trend is one we've been expecting all year as a multitude of factors have aligned: Strong employment rates, continued economic growth, Federal Reserve rate hikes and a strong equities market.

On Thursday, the Dow Jones Industrials dropped more than 200 points in response to the rise in interest rates. Most analysts see the selloff as a brief pause as investors swallowed the higher rates. The market stabilized Friday morning on a strong jobs report.

With Federal Reserve Chairman Jerome Powell saying this week that target interest rates were still well below normal, and economic indicators showing more U.S. expansion, analysts now have their sights set on 3.5 percent as a potential future watermark for the 10 Year Treasury.

Job market strong

Much of the rise in bond yields this week comes in response to strong jobs numbers. The unemployment rate continues to plummet in 2018, hitting lows America hasn't seen since Neil Armstrong stepped foot on the surface of the moon.

September's unemployment rate decreased by 0.2 percent to 3.7 percent. So far in 2018, the unemployment rate and the number of unemployed has decreased by 0.5 percent and 795,000 respectively.

The biggest change was the expected upward revision of numbers from July and August, to the tune of 87,000 more than previously reported. After those revisions, job gains have averaged nearly 190,000 per month over the last three months.

With the increase in employment we've also seen an increase in wages. September's jobs report shows average hourly earnings for all employees on private non-farm payrolls rose by 8 cents. Overall in 2018, average hourly earnings have risen by 73 cents, or 2.8 percent.

Business and professional services continues to lead the way in hiring, followed by health care and transportation and warehousing.

Trade developments

Elsewhere, this week began with the new trade agreement between the U.S., Mexico and Canada.

Investors were pleased to see the deal come together, especially after months of tense negotiations and threats by the Trump administration to move forward without Canada. In the end, Canada joined the deal and a replacement for NAFTA is expected to be approved by Congress.

Altogether, this week's news adds to the momentum we've been discussing for months. With the exception of some headwinds in the housing market, economic growth is not yet slowing down. Volatility will cause some choppy markets, but overall a heated up economy is pushing interest rates higher as a counterbalance to growth for the foreseeable future.