Categories: Family Office, Financial NewsPublished On: March 25th, 2022Comments Off on Market Update17.8 min read
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The Federal Reserve announced a 0.25% interest rate hike and expected to raise interest rates seven times this year. The result was in line with market expectations, which caused the market to react positively. A rate hike has the following possible impacts on our daily life:
The 30-year mortgage interest rate is closely related to the trend of the 10-year government bond. As expected, mortgage interest rates and 10-year government bond interest rates continue to rise due to the interest rate hike.
As for whether investors should invest or cash out, it depends on the return and risk of the investment project itself.
Many people have complained about the abysmal interest rate paid by banks. Previously, people had expected to see an increase in the deposit rate after the interest rate hike, but banks now have abundant deposits and are not willing to raise the rate.
There is no direct relationship between interest rate hikes and the performance of the stock market. The most notable correlation is the rate hikes’ possible impact on the economy. If the rate hikes drive our economy into a recession, the stock market will be the first to react as a leading indicator. An inversion of 10-year and 2-year Treasury rates is also another leading indicator of an impending recession.
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