How Do Rising Rates Impact Stock Returns?
Predicting the winners and losers of the next rate hike is a difficult undertaking.
Question: I know longer-duration bonds do worse when interest rates rise, but what happens to stocks when rates rise?
Answer: Investors who have a basic understanding of how bond duration works know that rising rates mean bond prices fall. Holding all else equal, investors could reasonably expect higher-quality, longer-duration bonds to sell off when the Fed hikes rates.