Tag Archives: rising interest rates
Impact of Rising Interest Rates on Small-Cap Indices
Rising interest rates certainly has become a central investment theme going into 2017. The 10-Year Treasury yield closed at 2.48% on Jan. 27, 2017, representing an increase of nearly 103 bps from six months ago. Research has shown that equities tend to perform better following a rate hike, if inflation levels are moderate. However, return…
- Categories Equities
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When Smart Beta Fails
How should an investor in a factor (or “smart beta”) index judge its performance? In this respect at least, smart beta is like any other strategy: you should evaluate it against the claims that its vendors made before you bought it. This requires some subtlety. Smart beta methodologies pick stocks based on fundamental or technical…
- Categories Equities, Factors, S&P 500 & DJIA, Strategy
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Countdown to Tomorrow
Tomorrow the Federal Reserve is expected to raise its benchmark Federal Funds rate by 25 basis points — the first increase in seven years. This increase, assuming that it comes, must surely rank among the Fed’s most advertised and anticipated moves ever, and Wall Street trading desks are ramping up in expectation of heightened trading volumes. We have…
- Categories Equities, Fixed Income, Strategy
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Rising Rates’ Silver Linings
Bond values will, definitionally, fall when interest rates rise. However, different types of bonds have differing characteristics. The chart below shows the annual performance of the S&P 500 Bond Index and the S&P/BG Cantor 7-10 US Treasury Bond Index. (The S&P/BG Cantor 7-10 US Treasury Bond Index is the treasury index most similar to the…
- Categories Fixed Income, Strategy
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