What Effect A Yield Surge Will Have On Stocks

What Effect A Yield Surge Will Have On Stocks

Article Summary

  • An increase in yields might bring short term volatility, but could also be a good sign long term.
  • History shows that a steady increase in interest rates won’t adversely impact yields.
  • The bond sell-off in Europe is helping to drive yields higher in the US but could be tempered by stronger foreign currencies.

This year, investors will be faced with something that they haven’t seen in a long time – a Fed Funds interest rate hike. Last year saw the tapering and eventual completion of the historic quantitative easing program designed to inject liquidity into financial markets and restart the economy. The normally dovish Fed made a statement recently that seems to confirm that there will be a rate hike in 2015…

 

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