Insight
Financial Gravity
Why has the rapid rise in interest rates had such little impact on the U.S. economy? Some think it’s the shift from manufacturing to services. We explore the effect of financial gravity and implications for investors.
Key takeaways
- Financial gravity is a sense of how heavily interest rates weigh on markets and the economy. It accounts for both the level of the rate and the time at that level.
- The path that interest rates travel also greatly influences how heavy rates feel.
- Higher-for-longer interest rates would have a profound impact that markets are not pricing in.