Why Bond Prices go Down – Prices versus Yields
When Stock Prices go up, bond prices go down.
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?)
Anuj holds professional certifications in Google Cloud, AWS as well as certifications in Docker and App Performance Tools such as New Relic. He specializes in Cloud Security, Data Encryption and Container Technologies.
Anuj Varma – who has written 1221 posts on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.
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