For over three decades, the interest rates on debts have been generally sloping downwards. This has been the status quo for so long that major banking houses like U.S. Bancorp need to conduct special training sessions to teach a new generation of employees that, yes, interest rates do rise. A lot of energy has been spent trying to figure out the sequence and degree to which the Federal Reserve will make the cost of money more expensive.
In my view, there are three things to keep in mind when thinking about rising interest rates.
First, the prices of individual stocks may come down a little bit if interest rates rise at a rate greater than expected. Some of this may be company specific, as the balance sheets of corporations finally start to get scrutinized with new assumptions of higher refinancing rates. Other times, it may be a more … Read the rest of this article!