Why izzit that bad news for the economy is good for bond markets and vice versa?.................
Why izzit that bad news for the economy is good for bond markets and vice versa?.................
When the economy slows, interest rates are lowered to bolster business and consumer credit. Lower interest rates cause bonds already owned to appreciate (short answer). Your 5% bond is worth more if new ones are being offered at only 4%. Higher rates (yields on bonds) hurt the value of bonds already owned. Your 5% bond loses value if a new bond can be purchased at 6%.