School of Business
Dr. Nate Peach
This paper is to investigate the relationship that Treasury bonds and Fed Funds have with the stock market. This research is valuable because the stock market is a major aspect of America’s economy, although many consider it unpredictable and difficult to understand. The goal of our research is to lessen this unpredictability, as well as to assess the inverse relationship that hypothetically exists between the stock market, bonds and Fed Funds. By employing an OLS regression model, this study finds the effect of Fed Funds is statistically and economically significant with regard to the stock market, also having the predicted inverse relationship. However, results for bonds are inconclusive; they are neither statistically or economically significant, nor do they consistently have an inverse relationship with stocks. Nevertheless, this paper can begin to show the hypothetical relationship that exists between stock and bond markets, and provide a basis for future research.
Nelson, Josh and Koch, Mason, "Effects of Bonds & Fed Funds on the Stock Market" (2018). Student Scholarship - School of Business. 13.