http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise How Fast Will Interest Rates Rise? The general consensus is that the U.S. Federal Reserve will raise interest rates in December. How fast will interest rates rise and what effect will higher rates have on stock investing? Bloomberg Business addresses the first issue and believes that the Fed will keep rates unusually low for years. The Federal Reserve is widely expected to raise interest rates next month, a move that some worry would make it harder for the central bank to achieve its goal of 2 percent inflation. Wall Street says worry not: A newly released survey of the nation’s biggest bond dealers suggests Fed policy will be easy for years, even after a series of rate hikes. The results show that primary dealers believe the neutral rate-the borrowing cost, adjusted for inflation, that keeps the economy at full employment with stable prices-is currently around zero, and will rise more or less in a straight line to 1.5 percent by the end of 2018. Compare that with the Fed’s own projections of where interest rates will be (adjusted for projected inflation) over the next few years. How fast interest rates will rise will depend on the U.S. economy but the consensus of bond dealers is that we will see a slow and steady increase up to no more than 1.5 percent in the next three years. Interest Rates and Stocks When rates go up will it be good or bad for the stock market? According to The Wall Street Journal stocks have rallied recently based on a possible rate increase. U.S. stocks rallied Wednesday after minutes from last month’s Federal Reserve meeting showed most officials anticipated economic conditions could be strong enough for a December interest-rate increase. Major indexes posted their biggest one-day gains in nearly a month. The Dow Jones Industrial Average rose 247.66 points, or 1.4%, to 17737.16. The S&P 500 rose 33.14, or 1.6%, to 2083.58, and the Nasdaq Composite climbed 89.19, or 1.8%, to 5075.20.

1. B y w w w . P r o f i t a b l e I n v e s t i n g T i p s . c o m
How Fast Will Interest
Rates Rise?

2. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The general consensus is that the U.S.
Federal Reserve will raise interest
rates in December.

3. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
How fast will interest rates rise and
what effect will higher rates have on
stock investing?

4. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
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Before We Continue…

5. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Bloomberg Business addresses the
first issue and believes that the Fed
will keep rates unusually low for
years.

6. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The Federal Reserve is widely
expected to raise interest rates next
month, a move that some worry
would make it harder for the central
bank to achieve its goal of 2 percent
inflation.

7. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Wall Street says worry not: A newly
released survey of the nation’s biggest
bond dealers suggests Fed policy will
be easy for years, even after a series
of rate hikes.

8. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The results show that primary
dealers believe the neutral rate-the
borrowing cost, adjusted for
inflation, that keeps the economy at
full employment with stable prices-is
currently around zero

9. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
and will rise more or less in a straight
line to 1.5 percent by the end of 2018.

10. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Compare that with the Fed’s own
projections of where interest rates
will be (adjusted for projected
inflation) over the next few years.

11. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
How fast interest rates will rise will
depend on the U.S. economy but the
consensus of bond dealers is that we
will see a slow and steady increase up
to no more than 1.5 percent in the next
three years.

12. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Interest Rates and Stocks

13. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
When rates go up will it be good or
bad for the stock market?

14. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
According to The Wall Street Journal
stocks have rallied recently based on
a possible rate increase.

15. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
U.S. stocks rallied Wednesday after
minutes from last month’s Federal
Reserve meeting showed most
officials anticipated economic
conditions could be strong enough for
a December interest-rate increase.

16. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Major indexes posted their biggest
one-day gains in nearly a month.

17. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The Dow Jones Industrial Average
rose 247.66 points, or 1.4%, to
17737.16.

18. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The S&P 500 rose 33.14, or 1.6%, to
2083.58, and the Nasdaq Composite
climbed 89.19, or 1.8%, to 5075.20.

19. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
“I think it’s a relief for the market that
in the opinion of the Fed policy
makers the economy is not falling
apart,” said Keith Bliss, senior vice
president at brokerage Cuttone & Co.

20. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Financial stocks rallied, as higher
rates can boost banks’ profits because
they can widen the difference between
what banks charge on loans and
what they pay for deposits.

21. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
As the article notes, banks will benefit
from higher rates.

22. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Another factor is the uncertainty that
has affected markets for a year and a
half as this issue has been on the table.

23. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The fact that rates will in all likelihood
rise slowly and not very far seems to
have reassured investors.

24. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Utility Stocks

25. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Last week we wrote that it is time to
sell utilities.

26. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The Street differs. Their view is that
utilities offer yield with safety for
the conservative investor.

27. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Utilities are in a class by themselves.
They’re known for their higher-than-
average dividend yields and lower
than average stock volatility.

28. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
There are a number of relatively safe
utility stocks (i.e. low betas, meaning
low stock volatility) that offer
dividend yields in the neighborhood
of investment-grade bonds

29. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
while offering potential stock returns
as good as or better than the S&P 500
stock index.

30. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
The specific utilities mentioned in the
article are NextEra Energy, Idacorp,
Excel Energy, DTE Energy, Dominion
Resources and Brookfield
Infrastructure Partners.

31. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
Our suggestion is to consider how fast
interest rates will rise, wait for utilities
to take a hit when the Fed raises rates
and when buy when prices are
depressed.

32. http://profitableinvestingtips.com/bond-investing/how-fast-will-interest-rates-rise
As always do your own homework
before investing.