With Fed set to hike US rates, 'ultra-cheap money' era nears end | Fin24

At the conclusion of its policy meeting on Wednesday, Fed Chair Jerome Powell opened the door to raising rates in March, and most analysts expect a total of three hikes this year alone.

"Borrowers feel that pain, much more so than looking at a broader context where three-and-a-half percent was a record low prior to the pandemic," said Greg McBride, chief financial analyst at Bankrate.com. Since March 2020, individuals and institutional investors alike have aggressively bought and traded risky assets to take advantage of almost unlimited access to capital.

Cryptocurrencies, another poster child for speculative assets, have seen a severe correction over the last two months. Bitcoin is down nearly 30 percent, and ethereum has lost more than 40 percent. However, she predicted demand will remain strong for the debt of companies with strong finances, which"will limit any real increase" in corporate bonds' yields.The transition could be tougher for less financially sound companies. So-called"junk bonds," issued by these corporations,"might be the worst asset class for now bond-wise," Rupert said.

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