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Stocks' resilience to rate hikes
A report from HSBC Bank confirms that surpassing the 5% level in 10-year Treasury bond yields or experiencing sharp fluctuations could pose a future risk to the stock market. However, these are not barriers at present. The report explains that consumers and businesses are currently able to withstand these pressures, with expectations that the central bank will keep interest rates unchanged over the next two years. This stance supports the resilience of various economic sectors, particularly in the U.S. stock market. Despite rising bond yields, high-income households benefit from the wealth generated by increasing stock prices, while those with lower incomes face pressures due to variable-interest debts. Meanwhile, most mortgages remain protected by fixed interest rates. Additionally, companies within the S&P 500 index maintain strong financial positions and show relative stability in their valuations. Growth is expected in the finance, energy, and industrial sectors if interest rates remain steady at their current levels.
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