The Fed's next move could be bad news for art investors

The Federal Reserve is widely expected to hike interest rates in December for the first time in nearly a decade, and the move is expected to have wide ranging ripple effects.

One such ripple could hit the price of art.

In Citi’s new report on the global art market, analysts pointed out that as real interest rates rise in the US, their index of art prices falls.

“Art and gold respond negatively to periods of rising real interest rates,” Citi’s Steven Wieting said.

“But macroeconomic volatility also harms art valuations,” Wieting added.

“[T]here is a clear link between art prices and the global economy,” said Christophe Spaenjers, assistant professor of finance at HEC Paris. “For example, some of the strongest falls in art prices were observed during World War I, in the early 1930s, following the 1973 oil crisis, in the early 1990s and after the 2008 financial crisis.”

All of these relationships aren’t airtight. Nevertheless, they’re all worth considering before you drop millions on that Modigliani.

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