Graybeard
Full time employment: Posting here.
- Joined
- Aug 7, 2018
- Messages
- 597
We all know how bond math works - coupon goes up and the price of the bond goes down or the nav on a bond fund goes down and visa versa.
So inflation is spooking the equity market, wouldn't that drive demand for bonds or bond funds and if so then wouldn't higher demand mean the price would rise and the coupon should drop? Yet as inflation terrorizes the equity market, the coupons are rising and prices falling.
This is a generalization, maybe some types of bonds/funds (high yield?) are not behaving like this but corporate bond funds and treasury bond funds prices are dropping. I am more attracted to buying T bills vs being in a bond fund now as even in short duration bonds/funds are losing value due to nav losses.
Maybe it is because the Fed will increase the FOMC rate on Wednesday so coupons will rise making prices fall yet why doesn't supply and demand offset that? I'm sure there is an obvious answer or a complex answer (since bonds are somewhat mysterious).
So inflation is spooking the equity market, wouldn't that drive demand for bonds or bond funds and if so then wouldn't higher demand mean the price would rise and the coupon should drop? Yet as inflation terrorizes the equity market, the coupons are rising and prices falling.
This is a generalization, maybe some types of bonds/funds (high yield?) are not behaving like this but corporate bond funds and treasury bond funds prices are dropping. I am more attracted to buying T bills vs being in a bond fund now as even in short duration bonds/funds are losing value due to nav losses.
Maybe it is because the Fed will increase the FOMC rate on Wednesday so coupons will rise making prices fall yet why doesn't supply and demand offset that? I'm sure there is an obvious answer or a complex answer (since bonds are somewhat mysterious).