Nasdaq exec wary of rising US rates

MANILA, Philippines — Rising interest rates in the United States is something to watch out for as it would drive up costs of everything, according to Nasdaq president of Capital Access Platforms Nelson Griggs.

Griggs, who was asked about his outlook on the global economy and global markets including the Philippine stock market, said higher interest rates drive up costs of everything, from homes to cars.

“What’s really driving the US markets, particularly, is the interest rate environment – the crossover of five percent for the 10-year bond, and that has not happened in the last 16 years. So that just drives expenses up for everything. It impacts home loans, auto loans, business loans. So I think that has just gone on a bit longer than we had anticipated,” he said during a recent press conference in Manila on the occasion of the company’s 10th anniversary in the Philippines.

At the same time, however, he said the US economy also remains resilient despite the challenges.

“We also thought we’d be in a recession in the US by now or not. So those two competing factors are really what we’re watching. And I think that the statement in the US is a bit that we think rates are going to be higher for longer because there was a anticipation that maybe in the first quarter of next year, we may actually see a rate cut. Those bricks have now been pushed out to the second part of the year,” he said.

The big question, he noted, is when does the consumer start to feel some of the pressure of these higher interest rates.

Depending on what happens next, he said stock markets in general would be watching the US economy. For now there are a lot of capital market activities in the US stock market.

On the ongoing war in the Middle East, Griggs said: “As much as the tragedy in the Middle East is a tragedy, and it’s hard to watch every day at the moment, that’s not impacting the markets to a large degree, unless there’s going to be even more escalation outside of where, where it is today.”

Over the past 10 years, the interest rate on the US government 10-year note was low.

When the COVID pandemic started, for instance, the interest rate for a 10-year government debt security was less than one percent but the yield has now jumped to about five percent for a 10-year note.

Interest rates have been rising as the cost of living increased when economies reopened after the pandemic. The war in Ukraine worsened the situation as it reduced the food and energy supply in Europe and Africa.

Griggs, who was in Manila for Nasdaq’s 10th anniversary in the country, said that as for the Philippines, the company is optimistic of growth in the country and that it seeks to expand its workforce to 400 employees by the end of 2024.

This is part of the company’s commitment to help advance economic growth in the country through job creation and the development of a talented and skilled workforce, he said.

Nasdaq’s Manila office started with approximately 100 employees when it opened 10 years ago and has now grown to more than 300 people.

Nasdaq is a global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators. It provides data, analytics, software, exchange capabilities, and other services.