There are a few key return drivers for stocks and bonds, and the level, rate of change, and direction of interest rates is one of them.
Rising rates decrease the amount of money available, or money supply.
Higher interest rates also increase the cost to borrow, or the cost of capital, and that impacts people and businesses.
We are more inclined to buy a house at 3% or a car at 2% than we are at 5% or 7%. The rate also impacts how much you can afford to borrow.
The10 year U.S. Treasury rate peaked on October 24, 2022 at 4.25%. Today it's 3.6%.