Traders spent the week grappling with undeniably strong economic growth and the trouncing of rate-cut hopes. With most of December's data in the hopper, the fourth quarter of 2006 has shaped up to be more of a barnburner than expected. Economists believe fourth-quarter GDP will reflect 3.3% growth, as the labor market remains robust, the housing market is working off its overbuilt inventory and the consumer is still spending. In particular, new-home sales data this week showed that homebuilders are working down their inventories. Friday's durable goods orders reflect increasing capital spending outlays. "Forget about the rate cut," says John Lonski, chief economist at Moody's Investors Service. The markets have shifted into another set of expectations and risks, says Lonski. The expectations are for stronger growth -- closer to the 3% that economists call trend growth for the bulk of the year. But the risks include a possibly overheating economy, higher interest rates, and fears about inflation and fed funds rate hikes. The Treasury bond market, which has been weakening all year, meaningfully broke down this week, sending yields higher and through a key resistance level at 4.85% on the 10-year note. The 10-year ended the week yielding 4.88%, up from 4.77% last Friday, and at its highest yield in five months.