The Outlook Of Bond And Stock Investments | Interview With Al Arabiya

Sep 25, 2022 | 1 min

Al Arabiya hosted Abdulmohsin Al Omran, Founder and CEO of The Family Office, to shed light on the bond market amid increasing interest rates. Below are highlights of the interview:

  • Inflation is the main reason behind the increase of interest rates by the Federal Reserve (the “Fed”).

  • Pending the Fed meeting next September, we expect three additional increases of 0.75% each.

    • The bond market is affected by rising interest rates. Today, bond prices are higher than stock prices for four reasons:
      - Higher interest rates
      - Withdrawal of liquidity from the financial and banking system
      - Absence of market makers since banks affected in the 2008 correction can no longer accommodate a large volume of bonds
      - Revised credit rating of bonds with a looming US recession.

  • Investors are buying bonds to achieve returns amid low interest rates. They should, however, avoid concentrating their investments in bonds alone and borrowing to buy these bonds.

Watch the full interview above.

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