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Tuesday, Jun 27th

Last UpdateTue, 27 Jun 2017 1pm

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Bond Market

The bond market is the biggest securities market in the world. Investing in bonds allows investors to reduce the risks to other parts of their portfolios, such as stocks and commodities. Investors can use bonds to hedge against economic slowdowns and profit from credit contractions and disinflationary environments. Bonds are particularly beneficial when the stock markets are starting to get volatile or when a specific set of data, such as the inflation report, is due to be released. The price of a bond is in inverse proportion to the bond's yield, i.e. the effective interest rate of the bond. When the bond yield rises, the bond price falls, and when the bond yield falls, the bond price rises. Trends and events that are good for bonds, such as slowing economic growth and falling inflation rates, tend to result in rises in bond prices and drops in bond yields.

 

Overall View of the Bond Market