WHY HIGHER RATES CHANGE EVERYTHING.

Since the early 1980s, investors globally have enjoyed declining interest rates, declining inflation, and higher stock and bond prices alongside them. But now that the interest rate cycle is turning back up, all of those benign trends risk going into reverse. Companies are reshoring economic activity, and globalisation is going into reverse. There are now heightened risks to owning ‘growth’ stocks, while bonds, for example, are now experiencing unprecedented price volatility as central banks attempt to tighten monetary policy after years of stimulus. Investment strategies which have worked well for the last four decades are unlikely to hold up so well in the months and years to come. A new environment requires different thinking.