Credit Suisse examines how rising interest rates have historically influenced stocks, bonds, and investor behavior across 21 countries since 1900. The paper challenges the market’s fixation on Fed hikes, noting equities and bonds generally performed worse during tightening cycles despite widely anticipated policy moves.
Credit Suisse Global Investment Returns Yearbook 2016
Credit Suisse
Elroy Dimson
Research
72 Pages
Key Takeaways
Rate Cycle Impact: Across 21 countries from 1900–2015, equities and bonds delivered weaker real returns during hiking cycles than easing periods, challenging assumptions around gradual tightening.
US Market Reactions: Following the Fed’s 0.25% December 2015 hike, Treasury yields retreated and the dollar strengthened 1.4%, showing markets can react unpredictably even after heavily telegraphed decisions.
Long Run Equity Edge: From 1900–2015, global equities produced 5.0% annualized real returns versus 1.8% for bonds, reinforcing how extended holding periods shaped historical wealth creation.
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