$ProShares UltraPro S&P500 ETF(UPRO.US)$
“Will a rise in interest rates on 10-year US Treasury bonds cause the stock market to fall”
Recently, the interest rate on 10-year US Treasury bonds has broken through the recent high of 1.38. Judging from the analysis of price chart trends, it seems that the next wave of increase is about to begin.
Theoretically, 10-year US Treasury bonds are a “very safe” investment option, so rising interest rates will make “high-risk” stocks seem less worth investing in, causing investors to sell stocks one after another and invest in treasury bonds.
So will an increase in interest rates on 10-year US Treasury bonds actually cause the stock market to fall?
It's actually really hard to say.
To know the answer to this question, we can simply compare the charts of the S&P 500 index and US10Y for the past 30 years.
As we can see, if this logic were applied from August 1982 to June 1998, it is indeed quite accurate.
However, since July 1998, there has been a situation that has often occurred:
Interest Rates Rise > Stock Market Rises
Interest rates fall > The stock market also falls
Why is this happening? Isn't that counterlogical?
The author believes that it is precisely because some investors sell treasury bonds that the price of treasury bonds falls, prices fall, interest rates rise, and investors then invest money from arbitrage into the stock market that interest rates rise and the stock market also rises.
Therefore, I personally don't think there is any need to rush to sell stocks because interest rates on treasury bonds are rising. After all, the stock market has been rising in the long run, so there is no need to stop investing in high-quality stocks because you are afraid of interest rates.
What if interest rates are rising now, and the stock market is rising along with it?
$U.S. 10-Year Treasury Notes Yield(US10Y.BD)$
$S&P 500 Index(.SPX.US)$
This page is purely my personal blog to record my own investment opinions and homework. At the same time, readers are welcome to exchange opinions, but it is definitely not any trading advice. Anyone should have their own independent thoughts before investing, make a decision to buy or sell after careful consideration, and bear the consequences, and buy and sell at their own risk.
Therefore, no matter who reads the author's article or chart and then operates, the author is not responsible for any losses. Thank you.