Consequences of Rising Fed Rates

If the Fed must raise rates due to very strong employment numbers this Friday you will see:

Dollar UP due to the fact that investors will move into the dollar as rates rise.

Bonds DOWN due to the fact that bond values move opposite to rates and rising Fed rates will raise all rates at least initially driving bond prices down. Longer term if the Fed actually does fight inflation, bonds can recover. Bonds are at high risk moving forward in a recovery scenario or even if investors THINK the recovery is real.

Stocks DOWN due to competition from bonds as yields go up. Eventually bonds look better than stocks when rates rise enough as long as the rate of change and the duration of the increases is not too intense. If the move in interest rates is sudden and intense, gold would be the place to hide.

Gold MAY BE UP due to the risk of or even the perceived risk of inflation. If the Fed moves too aggressively, gold will get hurt due to the lack of inflation. Some say inflation risks are still far off on the horizon.

Thank you for reading. Remember that it's your money and you must make your own investment decisions!