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Special Report

Morningstar's Guide to Rising Rates

Morningstar analysts offer their takes on what higher rates could mean for investors.

With interest rates at near-zero levels, the Federal Reserve began to raise rates at the end of 2015. Since then, the Fed has boosted its benchmark rate six more times, and market watchers expect the Fed to boost rates yet again this week. In fact, the futures market is pricing in a 100% chance of a hike. Seems like a done deal.

What do ongoing rate hikes mean for investors? Cash holders are happy, as they're enjoying increased yields. Bond investors, however, have been none too pleased--at least not this year. Morningstar's long bond indexes are all down about 5% year to date. Shorter-maturity paper, meanwhile, is about flat.