Yield On The 10 Year

[Chas863]

Originally Posted by mathjak107

bond yields are falling because there is great demand for dollar denominated assets.

https://en.macromicro.me/collections...lar-gold-price

Falling bond yields means that existing bonds are becoming MORE VALUABLE. So, if a person is currently holding some 5% coupon bonds, then the bonds are continuing to pay that same 5% but their market value is increasing rapidly on the bond market... especially the mid to long term bonds.

This means that a person who bought some long-term bonds a while back when inflation was raging can now sell those bonds at a very nice profit if they wish to do so. Personally, I would recommend that anyone hold these bonds until they have owned them for at least a year and a day before selling in order to make the gain a tax favored long-term capital gain.

[mathjak107]

existing bonds becoming more valuable is a result of rates coming down because buyers are bidding rates lower by offering higher bond prices .

bond yields fall for one reason ..bond buyers are happy with the risk vs reward of a lower rate rate of return so they demand less interest to buy them ..

fear , greed and perception of the future inflation drive those rates .

if buyers demand more interest that determines where existing bonds as well as new bonds go .

when investors believe that in the short term we will have more inflation then long term , they bid short term rates higher then long term rates and we have the inverted yield curve like now

so values of existing bonds are determined by where new buyers bid them as well as newly issued bonds and the bids they get