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What Investors Misunderstand About Rising Rates


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What Investors Misunderstand About Rising Rates

(New York)

The whole market is generally afraid of rising rates. Both in 2015 and 2018, there were significant mini-meltdowns about the prospect of aggressive rate rises. One of the aspects that most worries investors is that higher rates will drive participants out of stocks and into higher-yielding bonds. However, while true in some respects, that narrative is far too simple. Higher rates are a symptom of a healthy and growing economy, which means the business fundamentals driving stocks are getting better, a factor which is likely far more important than incremental changes in rates.

FINSUM : We think there is some wisdom in these words, especially as they perfectly encapsulate what has happened with the market this year.

  • bonds
  • rates
  • yields
  • fed
  • economy

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Bonds



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