Saturday, August 9, 2014

The Perfect Income Strategy for a Rising Interest Rate Environment

Last week, we saw a massive broader market sell-off that, in part, appeared to be a reaction to stronger economic activity. This included 4% GDP growth in the second quarter and strong labor market data. These reports added to concerns that the Federal Reserve will allow interest rates to rise sooner than expected.
As economic activity picks up, the danger of inflation also rises -- and the Fed's primary weapon against inflation is higher interest rates. After a period of near-zero rates, an uptick in Treasury yields could cause a significant shock to the system and trigger a flight out of equities and into higher-yielding fixed-income products. (more)

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