A lot of investors are focused on interest rates, as rates have risen over the course of the last week.
A big focal point is what will happen with the Federal Reserve meeting next week, which typically has a pretty big impact on interest rates.
As you may recall from our previous updates, many businesses that borrow money from banks typically have a floating interest rate. This means that if interest rates rise, it may start to put pressure on their profitability.
We don’t see this as an issue yet, but it’s something that we are definitely watching for the future.
Hope you have a great week ahead!
Rising U.S. interest rate data was referenced from the 10 Year U.S. Treasury yield from Bloomberg Terminal for the trading week of 9/17/18 - 9/21/18. The statement of business loans from banks commonly having floating rate characteristics was a statement of opinion and matter-of-fact. An environment of rising interest rates can increase the debt service obligation of these businesses who have floating rate bank loans. A higher debt service obligation may reduce profitability, all else remaining equal.
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