With rising rates being covered widely in the news the past few days, I have grown more confused between the relationship between rates and stocks than ever before.
I have long been told that rates will move inverse to bond prices (obviously true), and that an increase in price in some asset is typically caused by an increase in demand for that asset.
So, I am confused why, as rates have increased (bond prices down) we have seen stocks come under so much pressure.
If rates are increasing without announcements from the FED, should we not assume that it’s because there is reduced demand for bonds (and therefore increases demand for stocks)??
Or, have people as a whole just decided bonds are worth less without actually seeing significant changes in the volume of demand?
Thanks in advance
Submitted February 23, 2021 at 01:56PM by Large-Understanding3 https://ift.tt/3qOfecI
