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> Higher rates -> reduced accessibility of personal credit -> lower spending -> lower corporate revenue -> higher cost of borrowing -> higher cost of debt servi
by rvbissell 5y ago
> Higher rates -> reduced accessibility of personal credit -> lower spending -> lower corporate revenue -> higher cost of borrowing -> higher cost of debt service -> lower profits -> stock price
I think it's simpler than that. An absurd example: if T-bills suddenly start yielding 12%, capital will flee from stocks to T-bills.
- deleted 5y ago[deleted]
- dstroot 5y agoThis. As bond rates rise capital moves out of stocks over to bonds. Bonds are higher in the capital structure as well. When bond rates go absurdly low capital moves into stocks (as we have seen).
- DSingularity 5y agoWill they ever yield that?!
- danuker 5y agoDoesn't matter. People don't invest exclusively in one of stocks or bonds, but diversify. A higher interest rate might make bonds slightly more attractive on a continuum.
- icedchai 5y agoBring back the 80’s.