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The Effect Interest Rates Can Have On Equity Sectors, Indices, And Commodities

Ben Howard profile picture
Ben Howard


  • After reaching almost 180 basis points [bps] (1.80%) in March of this year, the 10-year Treasury yield is now hovering around 118 bps.
  • Because of the volatility surrounding interest rates over the past 18 months, I wanted to conduct a sensitivity study between the 10-year yield and different sectors, indices, and commodities.
  • Currently, with a high correlation between stocks and bonds relative to history, bonds in totality might not represent a good hedge for systematic equity risk.

Looking directly up at the skyline of the financial district in central London - stock image
Nikolay Pandev/E+ via Getty Images

Why I Conducted This Analysis

From quantitative easing during COVID to inflationary fears following an economic reopening, interest rate volatility over the past 18 months has been astronomical in my opinion. At the start of 2020

This article was written by

Ben Howard profile picture
My investment focus revolves around growth-oriented equities with affordable relative valuations. While my focus is on large-cap equities, I am not constrained to specific sectors or industries within my investment strategy.Using a fundamental and valuation-driven approach, I seek investments with the potential to outpace the S&P 500 on a short to long-term basis. My strategy also utilizes a tactical approach on a short-term basis to reposition my portfolio in an attempt to mitigate downside risk.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VDE, VFH, VGT, VIS, VOX, VPU either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This analysis is not a guarantee of future results, models and projections are based on inputs that are likely to exclude all factors that may reflect a complete analysis. Furthermore, calculation errors, inaccurate reporting, and unseen inputs could bias results. For financial advice please consult with your advisor or other professional. This commentary reflects the personal opinions, viewpoints and analyses of the Alpha Squared Capital, LLC’s employees providing such comments, and should not be regarded as a description of advisory services provided by Alpha Squared Capital, LLC or performance returns of any Alpha Squared Capital, LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this article constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Alpha Squared Capital, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Alpha Squared Capital, LLC provides links for your convenience to websites produced by other providers or industry-related material. Alpha Squared Capital, LLC is not responsible for errors or omissions in the material on third-party websites, and does not necessarily approve of or endorse the information provided. Users who gain access to third-party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from use of those websites.

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Comments (2)

Banneker profile picture
Thank you for researching and producing these data. Great food for thought.
Ben Howard profile picture
@Banneker Appreciate it!
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