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Interest rates, inflation and bonds

Stock markets don’t move only because of companies. What central banks do (the Federal Reserve in the US and the ECB in Europe) affects them enormously.

  • High interest rates → borrowing is expensive, companies grow less and bonds pay more. Stocks usually suffer.
  • Falling rates → usually good for stocks and for crypto.
  • High inflation → central banks raise rates to slow it down.
BondA loan you make to a country or company in exchange for interest.
10-year bond yieldThe interest a country pays to borrow for 10 years. If it rises, stocks usually get nervous. See it in Stocks → Markets → Bonds.
RecessionWhen the economy shrinks two quarters in a row.