When interest rates rise, the value of (interest rate sensitive) bonds will decline.
FORBES: Not All Bonds Are Created Equal - A Cautionary Tale for Retiree Investors
Treasuries, for instance, are of the highest credit quality, but are also very interest rate sensitive.
FORBES: Not All Bonds Are Created Equal - A Cautionary Tale for Retiree Investors
Economist suggests going short on oil and buying interest rate sensitive stocks.
Hardest-hit would be interest-rate sensitive stocks of consumer-goods, financing and auto companies.
The move up in yields will be substantial enough over the next few years that all interest-rate sensitive securities will be affected (utilities, preferred stock, etc).
Fidelity National is certainly sensitive to activity in the residential mortgage market, and as rates on mortgages have come back down from April through mid-May, interest rate sensitive stocks such as the home builders, mortgage lenders and REITs have all rallied.
The economy grew steadily through 17 interest rate hikes, arguing that it may turn out to be sensitive to the level of interest rates but was not very sensitive to rate hikes from low levels.
Bank stocks, which are sensitive to interest-rate cycles, have bee among the biggest movers today.
Shares in financial companies, which are particularly sensitive to interest-rate moves, have been hit hard.
The average duration in the index is 26 years, which means it is super sensitive to interest rate changes.
And historically it has been less sensitive to interest-rate moves, so in that sense it is not quite like a normal bond.
"Some sectors are booming while others, which are very interest rate-sensitive and sensitive to a high dollar, are really doing it tough, " she says.
Interest rates rose on the news and the best investors at Marketocracy (the m100) responded accordingly by jettisoning interest-rate-sensitive shares out of their portfolios.
Take the ten-year Treasury: the ten-year Treasury at a 4% yield is less risky, less sensitive to interest-rate changes than a ten-year Treasury at 2%.
Such a swift about-turn would have been more difficult if interest-rate decisions had remained in the hands of a politician, sensitive to the opinion polls.
MUMBAI--Indian shares closed higher Thursday after recovering from their early morning losses, as investors made heavy purchases in rate-sensitive bank stocks on expectations of a cut in interest rates, dealers said.
Thus although the two studies agree that interest-rate increases hurt some economies more than others, they disagree about which economies are most sensitive.
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