Animation: Visualizing U.S. Interest Rates Since 2020
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Animation: Visualizing U.S. Interest Rates Since 2020

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Visualizing Interest Rates Since 2020

In March 2020, the U.S. Federal Reserve cut already depressed interest rates to historic lows amid an unraveling COVID-19 pandemic.

Fast-forward to 2022, and the central bank is grappling with a very different economic situation⁠ that includes high inflation, low unemployment, and increasing wage growth. Given these conditions, it raised interest rates to 2.25% up from 0% in just five months.

The above visualization from Jan Varsava shows U.S. interest rates over the last two years along with its impact on Treasury yields, often considered a key indicator for the economy.

Timeline of Interest Rates

Below, we show how U.S. interest rates have changed over the course of the pandemic:

DateFederal Funds Rate (Range)Rate Change (bps)
July 27, 20222.25% to 2.50%+75
June 16, 20221.50% to 1.75%+75
May 5, 20220.75% to 1.00%+50
March 17, 20220.25% to 0.50%+25
March 16, 20200.00% to 0.25%-100
March 3, 20201.00% to 1.25%-150

In early 2020, the Federal Reserve cut interest rates from 1% to 0% in emergency meetings. The U.S. economy then jumped back from its shortest recession ever recorded, partially supported by massive policy stimulus.

But by 2022, as the inflation rate hit 40-year highs, the central bank had to make its first rate increase in over two years. During the following Federal Reserve meetings, interest rates were then hiked 50 basis points, and then 75 basis points two times shortly after.

Despite these efforts to rein in inflation, price pressures remain high. The war in Ukraine, supply disruptions, and rising demand all contribute to higher prices, along with increasing public-debt loads. In fact, a Federal Reserve estimate suggests that inflation was 2.5% higher due to the $1.9 trillion stimulus, an effect of “fiscal inflation.”

Impact on the Treasury Yield Curve

The sharp rise in interest rates has sent shockwaves through markets. The S&P 500 Index has steadily declined 19% year-to-date, and the NASDAQ Composite Index has fallen over 27%.

Bond markets are also showing signs of uncertainty, with the 10-year minus 2-year Treasury yield curve acting as a prime example. This yield curve subtracts the return on short-term government bonds from long-term government bonds.

When long-term bond yields are lower than short-term yields—in other words, the yield curve inverts—it indicates that markets predict slower future growth. In recent history, the yield curve inverting has often signaled a recession. The table below shows periods of yield curve inversions for one month or more since 1978.

Yield Curve Inversion DateNumber of MonthsMaximum Difference (10 yr - 2 yr bps)
Aug 197821 -241
Sep 198013 -170
Jan 19824 -71
Jun 19821 -34
Dec 19886 -45
Aug 19892 -18
Jun 19981 -7
Feb 200010 -51
Feb 20061 -16
Jun 20061 -7
Aug 20067-19
Jul 20222*-48

*Data as of September 9, 2022
Source: Federal Reserve

For example, the yield curve inverted in February 2000 to a bottom of -51 basis points difference between the 10-year Treasury yield and the 2-year Treasury yield. In March 2001, the U.S. economy went into recession as the Dotcom Bubble burst.

More recently, the yield curve has inverted to its steepest level in two decades.

This trend is extending to other countries as well. Both New Zealand and the UK’s yield curves inverted in August. In Australia, the yield spread between 3-year and 10-year bond futures—its primary measure—was at its narrowest in a decade.

What’s On the Horizon?

Sustained Treasury yield inversions have sometimes occurred after tightening monetary policy.

In both 1980 and 2000, the Federal Reserve increased interest rates to fight inflation. For instance, when interest rates jumped to 20% in 1981 under Federal Reserve Chairman Paul Volcker, the U.S. Treasury yield inverted over 150 basis points.

This suggests that monetary policy can have a large impact on the direction of the yield curve. That’s because short-term interest rates rise when the central bank raises interest rates to combat inflation.

On the flip side, long-term bonds like the 10-year Treasury yield can be affected by growth prospects and market sentiment. If growth expectations are low and market uncertainty is high, it may cause yields to fall. Taken together, whether or not the economy could be headed for a recession remains unclear.

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This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

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Markets

Ranked: Top Countries by Stock Market Ownership

Where will people feel the most effects of financial markets turmoil? We rank countries by their stock market ownership rate.

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This cropped graphic tracks the stock market ownership rate for 33 select countries, as well as the number of shareholders in each country.

Ranked: Top Countries by Stock Market Ownership

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Key Takeaways

  • 55% of the American population is invested in the financial markets.
  • They are the top country by stock market ownership, followed by Canada (49%).

The rise of no-fee investment platforms have pushed people into the stock market, particularly those under the age of 35.

But some countries have a mature investment landscape, with a higher share of the population already holding invested assets.

We rank the stock ownership rate for 32 countries using data from HelloSafe, a financial services comparison website. They used the latest available figures available at the World Bank from 2023–2024.

This data includes direct shareholding as well as exposure via life insurance and pension funds.

Which Countries Are Most Invested in the Stock Market?

More than half of the American population (55%) is invested in the stock market, the highest for any country in this dataset.

RankCountryRegion% of shareholding
population
# of shareholders
1🇺🇸 U.S.Americas55%185.4M
2🇨🇦 CanadaAmericas49%19.1M
3🇦🇺 AustraliaOceania37%9.6M
4🇬🇧 UKEurope33%22.1M
5🇳🇿 New ZealandOceania31%1.6M
6🇸🇪 SwedenEurope22%2.3M
7🇷🇺 RussiaEurope21%30.5M
8🇫🇮 FinlandEurope19%1.0M
9🇨🇭 SwitzerlandEurope18%1.5M
10🇮🇪 IrelandEurope17%901K
11🇻🇳 VietnamAsia16%16.2M
12🇯🇵 JapanAsia15%18.7M
13🇫🇷 FranceEurope15%10.3M
14🇵🇹 PortugalEurope15%1.5M
15🇩🇪 GermanyEurope14%11.8M
16🇳🇱 NetherlandsEurope14%2.5M
17🇿🇦 South AfricaAfrica14%8.5M
18🇭🇰 Hong KongAsia14%1.0M
19🇹🇼 TaiwanAsia13%2.9M
20🇪🇸 SpainEurope13%5.9M
21🇸🇬 SingaporeAsia8%473K
22🇧🇷 BrazilAmericas8%17.1M
23🇮🇹 ItalyEurope7%4.1M
24🇨🇳 ChinaAsia7%98.7M
25🇮🇳 IndiaAsia6%85.8M
26🇦🇹 AustriaEurope6%510K
27🇧🇪 BelgiumEurope5%590K
28🇵🇱 PolandEurope5%1.8M
29🇦🇷 ArgentinaAmericas5%2.3M
30🇵🇭 PhilippinesAsia2%1.8M
31🇲🇽 MexicoAmericas1%1.5M
32🇲🇦 MoroccoAfrica1%190K

Ranked second, 49% of all Canadians are invested, and the two North American countries are far ahead of the rest of the world.

Many of the top 10 countries have public pension funds linked to markets, which may help increase their ownership rates.

Interestingly, the two most populous countries in the world, India and China both have single-digit stock market ownership rates at 6% and 7% respectively.

However even these small shares are large shareholding communities, numbering nearly 100 million each.

Ticket to Turbulence

The first four months of the new Trump presidency has been the single-worst start to a term for financial markets.

Before the newest pause on tariffs, the S&P 500 had lost 15% of its value since January, the most for a new term since the index started in 1957.

However, as the White House reinstated yet another pause on its earlier announced tariffs, markets regained some of its lost ground. (It’s still down 7% YTD as of writing this post).

With more than half of the American population invested, this turbulent ride is being widely felt.

Learn More on the Voronoi App

The S&P 500 has outperformed every other stock exchange in the world since 2015. Check out: Top Countries by Stock Market Returns Since 2015 to see where other top exchanges like the DAX and FTSE rank.

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