Category: Interest Rates

Due to a variety of factors, inflation has recently increased, reaching levels Americans have not seen in decades. Despite assurances from Federal Reserve Chairman Jerome (Jay) Powell, these price increases are ‘transitory,’ most people care more about their wallets than soothing words from ivory towers. Further, with Washington spending vast sums of money it doesn’t have, folks are concerned the recent inflation isn’t transitory, at all.

However, perhaps due to Jay Powell’s comments, fixed income investors have kept interest rates surprisingly low. After all, if the Fed says there isn’t any inflation, guess what? There isn’t any inflation, as it doesn’t pay to ‘fight the Fed.’ Regardless, at some point if current trends continue, interest rates should start to rise to better reflect the true price of money in the US economy. As of the 3rd Quarter of 2021, when adjusted for inflation, cash is, for all intents and purposes, free.

By hook or crook, that won’t last forever.

In this short series, the Investment Committee at Oakworth Capital Bank will explore what might happen if, and when, interest rates rise. The first section will focus on the bond market. The second will analyze what it would mean for equities. The third will examine what investors should do with their asset allocation, and the final segment will discuss how higher interest rates impact the general economy, including consumer spending and private fixed investment.

Thought Leadership

Higher Interest Rates: Summation

In this short series, the Investment Committee at Oakworth Capital Bank explored what might happen if, and when, interest rates rise. The first section focused on the bond market. The second analyzed what it could mean…

Thought Leadership

Higher Interest Rates: The Economy

2021’s most inescapable cocktail party conversation may not actually be around a virus and its mutations, at least in some circles. Instead, this year’s winner may be our very own Central Bank’s decisions in regards to…

Thought Leadership

Higher Interest Rates: Bonds

  Through dumb luck and sheer happenstance some 30 years ago, I found myself working at a buy-side, bond trading desk in Baltimore. To say I didn’t really know what I was doing would be an…