Are Higher Interest Rates Really Bad For Stocks?

August 21,2026

I like to keep investing simple… I also like to listen to what the market is telling me.

Not the headlines.

It’s very easy to assume higher interest rates are bad for stocks. Very simple: higher rates mean higher borrowing costs for businesses and consumers. This can slow the economy and make bonds more attractive for investors’ money.

The 30-year U.S. Treasury yield hit its highest level since 2007 this week—and naturally, this dominated the news wires.

But I think there’s some important context missing. And the market has also told a different story over the past few years.

Stay with me for a minute…

We’ve heard this headline before.

In 2022, the 30-year Treasury yield hit its highest level in 15 years

In 2023, it reached a 16-year high.

Now this week—a 19-year high.

That’s a clear trend.

You can find plenty of complicated explanations for why bond yields have moved higher. To us, it doesn’t need to be that complicated.

And where have we written this before? Things that go higher tend to go higher because they’re moving for a reason.

Long-term interest rates have been moving higher for years.

Now take a look at the two chats below.  The chart tells a pretty clear story.  And that’s why we love the technicals.  

Interest rates have been moving higher. So have stocks.

That doesn’t mean higher rates can’t hurt stocks. They can.

But rates often move higher when the economy is strong. And a strong economy can also mean stronger corporate earnings—which ultimately drive stock prices.

That’s why higher rates don’t automatically mean lower stocks.

And if anything, what we’ve seen over the past few years looks more like a normalization of interest rates after more than a decade of abnormally low rates, 0% Fed policy, and 3% mortgages.

And the opposite is also true.

Falling rates aren’t always a good thing.

When the economy is struggling, rates can fall quickly as investors look for safety and the Fed steps in to support the economy.

Sometimes rates are falling because something is wrong.

We start to worry when rates move very quickly in one direction.

A sharp move higher can disrupt things.

But that’s not what we’ve seen here.

Rates have gradually moved higher over several years, while the economy has continued to grow, earnings have moved higher—and so have stocks.

The lesson? Don’t assume higher rates are bad or lower rates are good. Listen to what the market is actually telling you.

Have a great weekend!