If there is a single lever that moves more asset prices than any other, it is the interest rate set by the Federal Reserve. When the Fed changes its target rate, the effects ripple through stocks, bonds, gold, the dollar, real estate, and every other asset class, sometimes moving trillions of dollars of value in a single day. Yet despite the Fed’s enormous influence, most investors understand its actions only at the surface level — they know that rate cuts are “good” and rate hikes are “bad” — without understanding the transmission mechanism that connects a rate decision to the…
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