Replying to Avatar TheBitcoinManual

Can someone explain to me like i'm 5, why the S&P500 is near all time highs when we have decade high interest rates? I thought increased interest rates means value of future earnings looks less attractive versus bonds

Is there something I am missing or is this legit a repricing of the stock market due to increased money supply?

I mean adjusted for inflation we're still like12% off 2021 ATH right?
Avatar
Slipstream 2y ago

Think liquidity (which already increased), not interest rates

Reply to this note

Please Login to reply.

Discussion

Avatar
TheBitcoinManual 2y ago

I get that liquidity can flow into a market and bid up prices, I just thought that when interest rates are high you wouldn't be in a risk on trade, and it would reflect in equities, but damn ATH at 5,5% is nuts

Avatar
Slipstream 2y ago

You're right that higher interest rates generally reduce liquidity, but there's other liquidity sources counter-acting that. For example nearly 2 trillion dollars have drained from the reverse repo since start of 2023 to fund USG deficit spending.