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bond prices and affect on the markets?
In the last week there has been volatility in the stock markets with people saying that bond yields are to blame.
If I’m not mistaken, yields go up when prices go down because the coupon is bigger in comparison to the price.
Also if I’m not mistaken, prices go down when people are selling things.
So if the price is going down because bonds are being sold, why isn’t this good for the market because then this money would flow into the stock market boosting prices?
Thanks…i guess my question is:
What is pushing the prices of bonds down?
Your basic assumption is flawed. If people sell bonds, they do not put the money into stocks. They would be going from a less risky investment to a more risky investment. Most are moving to money markets or gold or CD’s. The stock market has been going down because stocks are over-priced.
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