Rate Increase: Rate and Jitesh Kumar

rate increase: That is according to Jitesh Kumar, a derivatives strategist at Soci t G n rale, who says the most accurate predictor of long-term volatility in the S&P 500 SPX, 0.96% over the past 50 years or so has been the inflation-adjusted fed-funds rate, or the real rate, according to Market Watch. And real rates U.S. Treasury yields minus expectations for coming inflation have steadily risen since the central bank raised its benchmark overnight lending rate in December of 2015, with the Fed raising rates a total of nine times since its last rate increase at the end of last year. As the delayed impact of the Federal Reserve's rate-hike policy filters its way through the U.S. economy, a pickup in volatility can be expected. The key takeaway from our work over the past few years analyzing the impact of macro factors on equity volatility is that it is the real central bank policy rate that drives the subsequent volatility in equities, said Kumar, in a research note on Friday. Kumar didn't clarify if the expected uptick in volatility would lead to lower equity values. See Should stock-market investors watch out for a volatility pickup Read Here's one sign in bonds that the U.S. is poised for a sharp economic slowdown in 2019 Higher interest rates can make stock-market investors nervous because it translates into higher borrowing costs, which can, in turn, crimp corporate investment, earnings and ultimately hamstring economic momentum. (news.financializer.com). As reported in the news.