I am trying to understand the concept of when to buy and sell bonds of countries.
I am looking at Greek bonds. In the Financial Times newspaper there was a story saying
"Athens' two year bond yield maturing in April 2019 has hit its highest level in 8 months today, gaining more than 1.7 per cent since Monday, when the IMF voiced fresh concerns about the country's debt trajectory and growth prospects"
So I see that if there is economic instability in a country the yield goes up.
Why does the yield go up if the country is economically unstable?
The article further goes on to say that investors are selling these short term bonds heavily driving up yield.
Why does selling a bond drive up the yield?
If the country is economically unstable which is driving up the yield then isn't it a good time to buy the Greek bonds? Wouldn't you make money off of the higher yield?
I understand that the price of a bond and its yields are inversely related.
So if the yield goes up its price has gone down. But if you hold onto a bond until its maturity date, then, as well as making money on the higher yield, wouldn't you also get back the money you paid for the bond?
So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds?
Or is it the case that if yields have gone up, then the price of the bond has come down so you get less money paid out if you let the bond mature?