1

As the question says, what should we infer is happening when it's reported that the bond market is surging or rallying?

Is the implication that bond prices are increasing? Or is that yields are increasing, if so, which measure of bond yield?

1 Answer 1

3

The price is going up. The bond you own can now be sold for more.

This means that the effective interest rate for someone buying it at this new higher price is falling and suggests that buyers are willing to accept a lower interest rate now than you were when you bought it.

7
  • Thanks. What is confusing to me is that in the current environment where a bear market for bonds seems likely, why would bond prices be increasing? If investors or selling off bonds, shouldn't the price go down? Jun 15, 2022 at 17:35
  • 1
    @StatsScared Are you talking about bonds "rallying" on one particular day? There are always ups and downs. See here for why markets don't move in a straight line.
    – nanoman
    Jun 15, 2022 at 19:14
  • Why do you think a bear market is likely for bonds?
    – D Stanley
    Jun 16, 2022 at 2:47
  • Thanks. So is the lesson here that when one hears that 'yields' are up, then that's negative for bonds given that bond prices are also up? Or am I confusing the concepts? Jun 16, 2022 at 14:50
  • 1
    @StatsScared yields up means bond prices down
    – user253751
    Jun 17, 2022 at 13:29

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .