What do rising rates mean for investors?
What could be the impact on your stock and bond portfolios?
From 1982 to 2022, interest rates were generally falling.
Then, about 5 years ago, they bottomed and started to rise noticeably.
In this dramatic cycle rates peaked in the mid-teens and then declined even to the shocking point of negative short-term rates!
So, what happened to bonds during this time?
Aggregate bond prices have experienced a 5-year negative return!
How have rising rates affected stock prices?
Over the last five years, the S&P500 experienced one significant downturn.
Here are the historical drawdowns (and recoveries) from 1950 to the present when the 10-year bond yield increased 1% or more in a cycle:
We don’t know exactly when markets will become volatile but we know that rising interest rates historically have caused increased volatility for both stocks and bonds.
Our defensive strategies are very valuable in times of uncertainty.
Call us to discuss how we can manage your exposure to financial markets!
Your CommonWealth Team
