What to Invest In When Interest Rates Peak

“1) If you have perfect foresight about interest rates, then it makes sense to buy high credit, fixed-rate bonds. Generally, these are US Treasuries. Historically, when rates peak, the economy tends to slow down and the stock market tends to decline. The bond tenor should correspond with the stock market bottom. This way, the bonds mature at an opportune time to reinvest. 6 months to 2 years is a sensible range to consider. Of course no one has perfect foresight, and all of Wall Street is competing to be right. 2) The differences between these schools of economic thought have to do with the role of central banking. Central banks can control an economy’s money supply, which affects interest rates. Austrian-school economists tend to believe that inflation is simply a function of money supply and therefore it should remain constant to avoid inflation. Keynesians acknowledge this side effect of monetary policy, and advocate for active management. Looking back at historical data, we see that before active central banks, business cycle recessions occurred about twice as often. My view is that monetary policy “stretches out” a would-be recession into an inflationary period. Controlled inflation may be preferable to a recession where job losses and bankruptcies are more likely to occur”