Rate hike is coming, stock market is jumping

Like winter, rate hike is coming, sources close to the US Federal Reserve (Fed) said. Some affirmed Fed Chair Janet Yellen has no choice but to decide such move considering that the US economy as a whole, especially jobs, has never been so healthy since the 1980s.

Also, the interest rate has been so low for so long that one can now question the relevance of continuing this policy since its effects on the economy have likely reached their climax. The real fear however stems from any volatile reaction on behalf of the financial markets on which any new indication about the rate hike causes violent variations.

If the US economy has globally recovered, analysts think a rate hike will likely impact the stock markets negatively, perhaps even writing “the end” on the 7-year dream rally. Although cooling the markets seems needed, any abrupt correction may trigger chain reactions which have, to some extent, the potential to crash the markets, and then having the federal government rescuing the too big to fail group once again.

Fear the new highs.