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Developed world cash and bond yields in now in rising cycle. Why important?
October 5, 2017
In this paper, we discuss:
the evidence for us now being in an interest rate rising cycle and
the reasons why this is important to investors.
But in short, the reasons why this is important are:
At the end of a cash rate rising cycle, it is extremely common to have a crisis or crash. See Appendix C.
Most listed securities like shares and listed property, are priced of bond yields. As bond yields rise, a higher discount rate needs to be applied to determine the capital value (Net Present Value) of a listed share and listed property investment. So rising bond yields put downward pressure on prices of shares and listed property.
This also means terms deposits are likely to be higher in 12 months and some hedge fund investments should perform better.