I made a little side project https://totalrealreturns.com/ https://totalrealreturns.com/ to plot inflation-adjusted asset and asset class returns, including the

I made a little side project https://totalrealreturns.com/ https://totalrealreturns.com/ to plot inflation-adjusted asset and asset class returns, including the USDOLLAR virtual symbol which represents a nominal dollar. (Most users just enter symbols they care about, though.) In real (purchasing power) terms, I think this announcement means: 1. The Fed thinks the green line is declining too fast. (Green line = purchasing power of a nominal USDOLLAR, such as a paper dollar bill, or a zero-interest checking account.) 2. In order to make the green line flatten out a bit, we're going to raise interest rates more, reducing the supply of capital. 3. In the short-term to medium-term, raising interest rates will have an adverse effect on the blue line (bonds), due to interest rate sensitivity. 4. In the medium to long term, the effect on bonds may in fact be positive due to higher interest rates, but this depends on future Fed actions as well. (It seems to me structurally unlikely to create substantially positive real retuns for treasury bonds, at least. Maybe corporate bonds will benefit.) 5. Raising interest rates is intended explicitly to reduce aggregate demand in the short-term to medium-term. This reduces corporate revenues and corporate profits, which should hurt the red line (equities). 6. Raising interest rates also increases the discount rate which is applied to net-present-value (NPV) calculations, which means that future cash flows are discounted more heavily. This should also hurt the red line (equities).