Rate Increase Creates Risk for Both Bond and Equity Buyers

Long-term U.S. bonds continue to be in demand, even in the face of a potential increase in interest rates. Duration, which measures a bond's price sensitivity to interest rate changes, is higher for longer-term bonds, suggesting that buyers could be in for a big surprise if the Federal Reserve proceeds with the rate increase. See article here, WSJ. At the same time, equity markets fell with the renewed expectation of a rate increase. See article here, WSJ.