How do economic events affect asset prices?

How do economic events affect asset prices?

Economic events, like interest rate changes or GDP reports, can significantly influence asset prices by altering investor sentiment.

Can you give an example of an economic event and its impact?

Sure! For instance, when the Federal Reserve raises interest rates, bond prices typically fall, while stocks may react negatively due to higher borrowing costs.

What about inflation? How does it impact different assets?

Inflation generally erodes purchasing power, which can lead to higher commodity prices, while fixed-income assets like bonds may lose value.

Are there specific assets that are more sensitive to economic events?

Yes, commodities like oil and gold often react strongly to economic news, as do stocks in sectors like finance and consumer goods.