What Happens To Stocks When Interest Rates Go Up?

What Happens To The Stock Market When Bonds Go Up? Welcome to this informative YouTube video about the relationship between bonds and stocks. In this video, we will explore what happens to stocks when bonds go up and reveal a proven and backtested strategy that you can use to your advantage.

First, we will discuss the importance of keeping a close eye on the bond market, as interest rates directly impact the value of stocks. As interest rates rise, the appeal of riskier assets like stocks declines, making bonds more attractive to investors.

Next, we will delve into our backtesting analysis, where we examined a range of moving averages to determine the impact of bond market fluctuations on stock investments. We found that a rising bond market is beneficial for stocks since interest rates decrease, making stocks more attractive.

Our optimization test involved analyzing a range of moving averages, from 5 days to 100 days in 5-day intervals, resulting in a total of 20 backtests. The results showed that almost all of the gains in the S&P 500 came when TLT (the ETF that tracks US 20-year Treasury bonds) was above its average.

We then looked at a specific backtest with a 15-day moving average, which resulted in a strong performance for SPY (the ETF that tracks the S&P 500). SPY increased 9.8% annually in the analyzed period, and our strategy returned slightly less at 8.85% annually, despite being invested just 54% of the time.

In conclusion, we can confirm that stocks go up when bonds go up. However, we also discussed the inverse relationship between stocks and bonds, which we cover in another video titled "What happens to stocks when bonds go down."

Don't forget to like and subscribe to our channel for more informative videos like this. And, if you want to learn more about hundreds of other strategies for many other asset classes, be sure to visit our website. Good luck trading!

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