Didier Darcet
19 March 2021

Interest Rates: Last Round For Equities

In a series of three publications in February 2021, we explained how accelerating inflation – not simply high inflation – had been awfully bad news for equities for 140 years. Some of our readers argued that rather than inflation, interest rate was the key driver of equity behavior. If central banks continued using their purchasing power to cap government bond rates at low levels, equity markets should be fine.

Here, we refocus our analysis on interest rates, and our conclusion remains the same: last round for equities!