THE FED JUST RESET THE MARKET - Stocks Hit All-Time-High, Interest Rates Skyrocket!

Thanks to SoFi for sponsoring the video! Click here to sign-up for SoFi Crypto: https://sofi.com/graham | Let's talk about rising interest rates and what this means for the stock market / housing values - Enjoy! Add me on Instagram: GPStephan START BUILDING WEALTH WITH MY FREE NEWSLETTER: https://grahamstephan.substack.com THE MARKET IS PRICING IN A RATE HIKE For the first time in more than three years, markets are pricing in the possibility of another Federal Reserve rate hike. Inflation is returning, oil has climbed above $100, foreign countries are selling U.S. Treasuries, and long-term borrowing costs are already moving higher. Mortgages, credit cards, and loans could become even more expensive, while people holding cash may benefit from higher yields. WHY RATES COULD GO HIGHER The Federal Reserve raises rates to slow inflation by making borrowing more expensive and reducing spending. The problem is that inflation has begun accelerating again as energy prices rise and Treasury yields increase. If inflation remains stubborn while employment and asset prices stay strong, the Fed may decide the economy can withstand additional tightening. WHAT HIGHER RATES MEAN FOR STOCKS Higher rates generally pressure stocks because future corporate profits become less valuable and safer investments become more attractive. If government bonds pay more than 4%, investors have less incentive to take substantial risk for slightly higher stock market returns. However, history suggests rate hikes alone do not necessarily cause crashes. Since the 1960s, stocks have continued trending higher through many tightening cycles. Historically, stocks rose 76% of the time during the six months following a rate hike and 81% of the time over the following year. Economic weakness and recessions tend to matter more than the rate hikes themselves. HOUSING GETS EVEN MORE EXPENSIVE Mortgage rates have nearly tripled from their pandemic lows. A $300,000 mortgage that cost roughly $1,265 per month at 3% would cost about $1,900 at 6.5%. Higher rates price buyers out while simultaneously discouraging existing homeowners with cheap mortgages from selling. Surprisingly, rising mortgage rates have historically not translated directly into falling home prices. Instead, they tend to slow appreciation and reduce transaction volume. Inflation, economic growth, housing supply, and employment often have a greater influence on prices. THE BOND MARKET IS ALREADY RAISING RATES Markets are pricing a meaningful probability of a September rate hike, but the bigger story is that long-term rates are already increasing without the Fed doing anything. The Fed directly controls short-term rates, while mortgages, business borrowing, and other long-term rates are heavily influenced by Treasury markets. Investors worried about inflation are demanding higher yields, while foreign selling of Treasuries adds additional pressure. In effect, the bond market is tightening financial conditions before the Fed even votes. WHO LOSES FROM HIGHER RATES People with variable-rate debt are among the most exposed because their payments can increase immediately. The U.S. government is another major loser, with $38.5 trillion of debt and interest expenses approaching $1 trillion annually. Refinancing old government debt at higher rates could substantially increase future interest costs. Job seekers could also suffer if higher borrowing costs cause companies to slow expansion and freeze hiring, particularly as the labor market is already cooling. WHO BENEFITS Cash becomes increasingly attractive because high-yield savings accounts and short-term government debt can generate meaningful returns with limited risk. Homeowners who locked in mortgages below 4% are also in an unusually strong position because their payments remain fixed while inflation gradually reduces the real value of their debt. Ultimately, higher rates could create short-term pain while helping bring inflation and excessive asset valuations back under control. The key risk is whether policymakers can slow the economy enough to stabilize prices without triggering a deeper recession. Timestamps: 00:00:00 - Rising Interest Rates 00:01:07 - Higher Inflation 00:02:15 - The Stock Market vs Higher Rates 00:05:53 - Diversifying With Cryptocurrency 00:07:33 - Housing Valuations In 2026 00:09:45 - Rate Hikes In 2026 00:11:30 - The Biggest Winers / Losers For business inquiries, you can reach me at [email protected] *Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice.