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"Cash is competing with equities"

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• The American interest rate has been on the rise for several months and this interest rate process is starting to have an increasing impact on the financial markets. For example, the bond markets are leading to rising interest rates. Equity markets could also soon be confronted with the necessary headwinds.

• In February and March, equity markets were confronted with the necessary volatility. The rising interest rates on US government bonds were seen by analysts as one of the causes of this volatility. John Authers tells The Financial Times that this mobility can persist in the future.

Shares can suffer from rising interest rates

 

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• According to Authers, it is no longer correct to say that cash is waste. For example, he refers to the graph above which shows that the 3-month interest rate has approached the S & P 500 dividend for the first time since the crisis.

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• That is not the only thing. For example, on the graph above from The Financial Times, it can be seen that the interest on the two-year US government bond has even approached the dividend of the highest and most reliable dividend companies (S & P 500).

• According to Authers, the consequence of this rising interest rate is that the shares that have benefited from the "hunt for yield" in recent years are no longer that attractive.