Go to the NYSE Equities, Options, ETFs & Bonds and review the markets covered in Chapter 1. Review the Bloomberg article Fed’s Mester Lays out the Case against a July Interest Rate Cut.
What markets will you believe be affected most by interest rate forecasts
Relationship of the Stock Market to Interest Rate
The ability for companies and consumers to obtain credit depends on the interest rates. To boost growth and economic activity, the central banks lowers interest rates in times when financial stability is low. Barakat et. al. (2016) state that the goal is to decrease lending rates to make it easier for consumers to expend and invest. Changes in interest rates affect the economy as well as consumer credit, stock market volatility, and consumer spending. A rise in interest rates can have a rapid impact on stock markets. But, any larger effect on other areas of the economy could take longer.
Low interest rates directly impact the bond market. With submits from US Treasury Bonds to corporate bonds falling, potential capitalists are attracted. The bond market rises when interest rates decrease. Likewise, hiking interest rates weakens bond costs, placing fixed-income venture capitalists at a pitfall (Fabozzi & Fabozzi, 2021). As interest rates rise, people are more reluctant to purchase or recapitalize existing credits. Furthermore, investing in equities can sometimes be deemed too risky when the interest rate is higher. This could lead to very few purchases, or vice versa. If the Federal Reserve announces a rate decrease, buyers and investors will likely spend more. This ………… can cause stock prices to rise
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