Market Insider

Look ahead: Markets on rate watch

Traders on the floor of the New York Stock Exchange.
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As the Federal Reserve prepares to withdraw its quantitative easing measures, the path to higher interest rates is unlikely to be smooth.

Yet, while most traders don't foresee a big spike, yields could still touch uncomfortably high levels in 2014 as the market adjusts.

The ripple effect of higher rates has already been felt in the economy, with a jump in mortgage rates, but yields on the longer end of the curve are still expected to stay way below the norm in the coming year.

The National Association of Business Economists predicted Monday that short-term rates are expected to stay at current levels, but that the yield curve will steepen and the 10-year could rise to 3.25 percent by year end.

(Read more: Stock market stages modest climb)