Which asset will do well in a rising rate environment?

Discussion in 'Trading' started by curiousGeorge8, Oct 22, 2015.

  1. Besides the money markets?
  2. Nothing...
    lawrence-lugar likes this.
  3. Real Estate

    Rising interest rates will get the undecided into the market quicker. As the rates go higher more will jump in before it's too late.

  4. Any franchisor collecting a royalty that is also heavily indebted - Dunkin Donuts, McDonalds, Jamba Juice, Wyndham (motel franchising).
    cdcaveman likes this.
  5. Maverick74


  6. Like bank stocks?
  7. Maverick74


    Like all stocks. Rising rates creates a substitution effect out of bonds and into equities. It also usually signals stronger and more robust economic growth. After all higher rates is the markets way of compensating bond holders for higher future inflation which comes from higher price levels which comes from higher aggregate demand in the economy.
  8. eurusdzn


    The USD . Also it is likely , witness recent supporting evidence , that Short emerging markets, short emerging market currencies, short commodities will do well. Theory says (i think) that anything borrowed, funded and leverd in USD (short USD) will experience currency risk. They are effectively long a local currency and short USD so that spread will move against them and net with any capital gains of the asset. If both the asset and the currency move against them "the trade" can be unwound further driving up US treasury rates, USD and driving down some of the previously mentioned assets. Small exits in a crowded trade. You definetly want to pay back borrowed money at a lower value. This all assumes forex flows driven by interest rate differentials prevail. I read that these differentials is what is behind these trillions.
    Might be better to ask what will do poorly as there seem to be more to select from.
    Inverse etfs are a plenty these days if not able to short things.

  9. Yes ..... But for a very short duration. Maybe a day or two.

    #10     Oct 22, 2015