This is because money flows out of the bond market to the stock market (i.e. people SELL their bonds).

When people SELL bonds, the Government (or bond issuer) has to attract buyers again. To do this, they have to RAISE Yields. Hence, Yields have an inverse relationship with bond prices.

Now, Is this the ONLY REASON bond prices go down (when the stock market is surging)?

No – The second reason is, if people have LOWERED their trust of the bond issuer. In that case too, they will SELL their bonds.

So – the trick is finding out WHY EXACTLY are bond prices falling (YIELDS RISING?)

The post Why Bond Prices go Down – Prices versus Yields appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.