The Fed interest rate is inversely proportional to a bond's value:
- When the Fed increases interest rates, your bonds lose value.
- When the Fed decreases interest rates, your bonds gain value.
Since interest rates were rock bottom last year, they have nowhere to go but up. The Fed also announced that there would be several increases in rates to come. Does this mean we should wait until the Fed stops increasing rates to buy shares of bond ETF's at a bargain rate?
Take the example below. SPTL is a long term treasury ETF. It has been moving in the opposite direction as the federal funds rate. It's not just SPTL, but also most aggregate bond funds and municipal bond funds have been declining in value.
When people say "you can't time the market", does that only apply to stocks? Because I see clear indications of how bond funds can move.