How does the rate hike affect the United States?

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La política monetaria de Estados Unidos tiene un gran impacto en los mercados financieros, pero con efectos menores e indirectos sobre la economía europea y, como resultado, sobre los bolsillos de los ciudadanos de la zona euro. Desde finales del año pasado, su strategy ha cambiado, tras la decisión de la Reserva Federal de subir las tasas de interés en un cuarto de punto. up to 0.50%. It will not be the only one, since the North American central bank has shown in its latest statements that there will be more increases in the price of money in the coming months, even when it will be done gradually and in a controlled manner.

Este cambio de posición en su política monetaria se produce una década posteriormente de que se produjera la última subida de tipos. No es sorprendente que este be el primero desde 2006, antes de que estallara la crisis financiera. Esta medida ha contribuido a consolidar el crecimiento de la economía de Estados Unidos, a través de un ciclo expansivo en su actividad productiva que la ha llevado a lograr levels higher than 4% in its Gross Domestic Product during some quarters of the last few years. With the stimulus to the economy withdrawn, given the obvious signs of improvement, the magnitude of these increases remains to be verified. From 6.25% in which the price of money moved at the beginning of this century, and up to 0.25% at the end of 2008, in order not to abandon these levels for seven years. And that contrasts with the negative rates of Switzerland (0.75%) or Japan (0.10%) which are the countries where the price of money is cheaper.

The divergence of the North American monetary policy with which it is being carried out in the European Union is striking, which is totally different. In fact, on this side of the Atlantic, the European Central Bank (ECB) recently decided to continue with its monetary easing strategy through lower the price of money to 0%, as an instrument to improve economic activity in this geographical area, by detecting some signs of slowdown in its economy.

Types: investment possibilities

The tipping point of US monetary policy is having its most direct reflection on equity markets. Even though it has been largely discounted over the last year. Not surprisingly, the reaction of the markets to this change in trend has been to move towards other financial assets, in other words, towards new investment products that take these movements into account. When rates drop, investors see the stock market as the best instrument to make your savings profitable, and capital flows are directed towards this investment. Given this new economic scenario, the increases experienced in their markets will probably not look like in the years when they had to live with extremely low rates.

To this must be added that, given the loss of competitiveness of North American companies as a result of the dollar strength, savings can be directed to fixed income products. And very particularly to the North American bond, one of the great beneficiaries of this situation. A decrease in its price, with an increase in its profitability, will give investors the possibility of taking positions in this financial asset from now on with better performance prospects.

Even though it can be contracted directly, the simplest and most comfortable thing is to do it from a fixed income fund, which includes it in its investment portfolio. Or even take a step forward towards European equities, and that as a result of the lower interest rates that it presents at the moment, it can take up the baton left by the North American stock market after the upward climb in recent years. Not surprisingly, its most representative index, the Dow Jones, has appreciated in this period of low rates around 90%, after reaching its all-time highs during 2015, reaching the level of 18,312 points.

More expensive trips for Europeans

Citizens belonging to the eurozone who are going to move to the other side of the Atlantic, will also notice the effects of this measure, since they will be harmed by a less valuable euro in their exchange with the North American currency. And as a result, your vacation package, hosting reservation or access to other tourist services will be more extensive from now on.

In other areas of economic activity, the results will be much lower and will hardly reach your pockets. Without going any further, it will not affect the costs of banking services and products, which depend exclusively on Community monetary policy. No intention of changing strategy, after the last statement from the issuing bank. From this dynamic, the link with loans and mortgages will continue to be the same as before, with lower interest rates. It should be remembered that the main reference index for formalizing mortgages, the Euribor, is currently at - 0.012%, after having remained during the last decade between 0.059% and 5.384%.

Regarding basic savings products (deposits, bank promissory notes, etc.), they will continue to move through very weak levels in their performance, almost insignificant. Where they will rarely exceed the 0.50% barrier, Unless certain strategies are used to increase profitability (in relation to other financial assets, offers for new clients or contracting other products).

Currency parity

Another financial asset that is sensitive to the change in the monetary cycle in the United States is that which has currencies as a point of reference. It is no wonder that the US dollar has appreciated against other world currencies, since this new turn towards its economic police began. And despite the fact that its price against the euro has contracted by at least 2.80%, during the first months of this year.

The main problem will affect emerging economies, since they will have to face a more expensive dollar, which could even weigh down the evolution of Spanish companies with interests in some geographic areas (Brazil, Mexico, Argentina, etc.). Even though, on the other hand, will improve the balance sheet of European companies (Spanish) through its exports. Its reflection in equities has materialized with an adjustment in its prices, in line with the new economic reality.

Its impact on investment

Decidedly, the interest rate situation will have a more than important impact on the positions you open in equities. until help you make or lose money in the financial markets. Not surprisingly, it is one of the most determining economic variables for the evolution of the stock market at any time and situation. You should not forget them if you are looking to make your savings profitable with greater guarantees of success in all your operations.

Decidedly, the best situation will occur when interest rates remain low, as is the current scenario, since will drive stock prices cotizado en renta variable. El motivo hay que buscarla en el precio del dinero barato, las compañías financieras lo encuentran mucho más beneficioso para sus intereses. Todo esto se traslada a un mejor positioning en sus líneas de negocio. Suelen coincidir con la tendencia alcista de los mercados financieros.

The opposite movement, in other words, high interest rates, generates the opposite effect. As the price of money is more expensive, the problems for companies are greater. With reduction of its commercial margins and by extension of its prices in the markets. It is very common for them to develop bearish periods in the price. Where the most affected stock market sectors are those related to banking, financial groups and insurance companies.

Based on this scenario presented by interest rates, it will be highly recommended that you take positions when interest rates are low. While, on the contrary, the opposite with expansive periods in the money supply. Where the most reasonable thing is that you are a lot more cautious in all the movements you develop. Although it is in the United States where these situations most influence, the panorama of interest rates in the old continent cannot be underestimated.

Stock trading in this environment

If you want to take advantage of the evolution of interest rates, both on one side and the other of the Atlantic, you will have no choice but to apply a series of behavioral guidelines to make the most of your equity operations. They will help you improve your positions, it can even be the trigger for an increase in the performance of your savings from now on: Do you intend to follow them?

1. Vary your investment strategy depending on the procedure in which the interest rates are living at all times.
2. If necessary, it will help you to go renovatePoco a poco, tu briefcase de inversiones para llevarlo a los mejores enfoques de inversión en cada momento.
3. The meetings of the monetary authorities It will be a good parameter for you to make your decision, one way or another.
4. The recessive and expansive periods of the international economy will largely determine the monetary policy of the major areas of the developed world.
5. You can detect a significant number of financial instruments fundamentally developed to deal with high or low interest rate scenarios.
6. To make up your investment portfolio, you should pay attention that there are a number of values that are more sensitive to these monetary policies. Take advantage of them at all times. They can be very profitable operations for your interests.