New Delhi, Jan 30 (TIWN) A large and sudden jump in real interest rates could lead to a further selloff in US stocks, according to an International Monetary Fund (IMF) blog.

The unprecedented low real interest rates proceed to spice up riskier property, however the current upward transfer. Low lengthy-time period real rates are related to traditionally elevated value-to-earnings ratios in fairness markets, as they’re used to low cost anticipated future earnings progress and money flows. All issues being equal, financial coverage tightening ought to set off a real interest fee adjustment and result in increased low cost fee, ensuing in decrease inventory costs.  Despite the current tightening in monetary circumstances and considerations concerning the virus and inflation, international asset valuations stay stretched. In credit score markets, spreads are additionally nonetheless under pre-pandemic ranges regardless of some modest widening not too long ago.