Glossary · Macro · Beginner-friendly
Interest rates
In plain English
Interest rates are the price of borrowing money. When rates rise, loans cost more - and stock prices can shift as investors rethink what investments are worth.
Everyday analogy: The “rent” you pay to use someone else’s money.
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Why it matters
Rates are a master dial for discount rates, mortgages, credit, and sector leadership.
A bit more detail (optional)
Policy vs market rates
Central banks set policy rates. Bond markets set yields across maturities. Both feed into mortgage, credit, and equity discount rates.
Equity channel
Higher rates can pressure long-duration growth stocks and help net-interest narratives for some banks - with many exceptions.
Simple examples
Yield spike
When long yields jump, bond prices fall and equity leadership often rotates toward shorter-duration or value styles.
Yield spike week
Long yields jump. Bond prices fall; growth multiples compress; some banks’ net-interest narratives improve.
Easy mistakes to avoid
- Confusing the policy rate with the 10-year yield
- Assuming higher rates are always bad for every stock
- Ignoring that markets trade expected rates, not just today’s setting
Remember: Rates are a master dial for valuation and sector leadership.