Prof G Markets · Thursday, September 24, 2026
Howard Marks explains that when interest rates rise (outside of government intervention), it signifies that investors demand higher yields from investments. This demand can stem from a need for inflation protection, a perception of increased risk in lending, or competition for capital. He notes that the market's message is inferred from its actions rather than being explicitly stated.
“We never know exactly what the market is saying. The market doesn't tell you what it's saying. It only does something, and you can infer from what is going on around you what the causes might be.”
“When rates go up, other than when government puts them up, what it basically means is that people want more yield from a given investment.”
“The other reason that yields go up is because they think that the proposition has become riskier. So if they lend you $100 today, the probability that they get $100 back in 30 years, it may be a little less. So some risk.”