Who this is for — Multi-asset investors and traders: rates and inflation shift discount rates, equity multiples and flows toward cash/bonds — mandatory context for any fundamental thesis.
Interest rates and inflation covers how monetary policy (policy rates, QE/QT) and inflation (CPI, PCE, wages) influence stocks, bonds, FX and crypto — via cost of capital, growth expectations and risk appetite.
In plain terms — «How much money costs and how fast it loses purchasing power» — two levers the market reprices on every macro print.
Mechanisms
| Shock | Typical effect |
|---|---|
| Rates ↑ | Multiples ↓, growth pressured, stronger USD |
| Rates ↓ | Risk-on, duration assets ↑ |
| Inflation ↑ | Margin squeeze, hawkish central banks |
| Disinflation | Relief rally if soft landing |
The yield curve (2s10s) signals recession when inverted — steepening after inversion often aligns with cyclical restart.
Trading implications
- Earnings: pricing power vs cost inflation
- Value/growth rotation with rate path
- Crypto sensitive to global liquidity and real yields
- Calendar: FOMC, ECB, CPI, payrolls — event-driven volatility
Common mistake — Ignoring macro on a «good» single name — beta and factors dominate in rate-repricing regimes.
Example — Upside CPI surprise → Fed futures +25bp → growth P/E compressed intraday, utilities/energy relative strength.
Card
- Watch: policy rate, real yield, inflation breakevens.
- Read: Yield curve.
- Hub: Fundamental analysis.