Concerns
over rising interest rates also factored into the equation after the Federal Reserve gave no indication on Wednesday that it would abandon its approach of gradual policy normalization.
Not exact matches
Interest rates are
also projected to
rise, with the
rate on 10 - year Treasury notes increasing from today's 2.9 percent to stabilize around 3.7 percent
over the medium - term, significantly below the historical average.
And should
interest rates rise a little
over the next five years, these funds could be held in safe investments
also mitigating inflation risk?
Also, the need for
interest rates to
rise will be lessened to the extent that inflation expectations remain well anchored and wage pressures in stronger parts of the economy do not spill
over to other parts.
Still, the Fed
also earns an
interest spread between its assets and its liabilities, providing about 3 % annually (as a percentage of assets) in excess
interest to eat through, which would allow a further 50 basis point
rise in
interest rates over a 12 - month period without wiping out that additional cushion.
Also, like the Fortune column points out, the thesis that
interest rates will inevitably
rise, so bonds are a bad idea but stocks are now undervalued because of wide premiums
over bonds is seriously flawed because if bond yields
rise, it will be bad for bonds but the equity premium will drop as well, so it may not be necessarily good for stocks.
Sam
also stated, «I will attempt to argue why younger investors should focus on growth stocks
over dividend stocks in a bull market with potentially
rising interest rates.
Also keep in mind that a loan may start off with an extremely low -
interest rate, but the
interest rate could
rise over time if you select an adjustable -
rate mortgage (ARM).
The emissions price must
also rise at roughly the
rate of
interest (about five percent)
over time (to equate the discounted marginal abatement costs at different points in time).