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Tuesday, September 25, 2018

US risk-free rate is set to go much higher.

The US 10-year treasury yield has been consistently above 3% recently and is poised to go much higher because the US Fed will increase interest rates in the next Fed meeting.

A higher interest rate is bad for stocks because the future cash flow has to be discounted with a higher risk-free rate and this will make the stock valuation overly high.

1 comment:

Eric Ho said...

https://sg.finance.yahoo.com/news/fed-raises-rates-3rd-time-180143779.html