In January, President Trump called on the Federal Reserve to implement negative interest rates. Recently, yields on 1-month and 3-month Treasury bills dipped below zero on their own, without formal action by the Fed. Socionomists have long noted that rates set by the Fed follow changes in the T-bill market, so will the Fed now drop its rate below zero? Even if that happens, is there a consistent message for the stock market? As Robert Prechter noted in The Socionomic Theory of Finance, interest rates fell in the four biggest stock declines of the past 100 years. And during the bull market of the 1990s, when interest rates rose, stock prices tripled.
In fact, there have been times when stock prices and interest rates went down together, times when they went up together and times when one went up while the other went down.
To learn more, watch the video “Investors Can Relax About Rising Interest Rates–Here’s Why.”
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