To follow-up on the post last week, I subscribed to and downloaded some data from http://www.economagic.com/, which I think is a great source of data at a very reasonable price.
In looking at corporate bond rates (Moody's Baa index) and the S&P 500 since 1950, I think the reason for observing a positive relationship between changes in real interest rates and changes in the S&P 500 is mainly due to the underlying inverse relationship between real interest rates and inflation (which is inverse by definition because Real Baa Interest Rates = Baa Interest Rates - Inflation). In other words, decreasing inflation is associated with increasing real interest rates by definition. However, decreasing inflation tends to be associated with a rising S&P 500 as well.
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