Referencing the article below, I don’t understand why a bond selloff would occur. I can understand why peeps would bail on stocks, with an expectation of a big rate hike, and efforts to “torpedo” the economy to cool it down and squelch high inflation. But why a bond selloff? Wouldn’t investors flock the safety of bonds, increasing demand, and decreasing yields? Instead, as the article states. we’re seeing an _increase_ in yields, indicating a _decrease_ in demand for bonds?! So confused! Reference: Financial Times, page 1, 2023-07-07.
rate goes up price goes down, two more rate hike and price would go down further, but can’t below par though.
Probably anticipating the interest rate would rise further thus putting downward pressure on bond prices
Eureka! I got it… thank you! So where are they parking their funds? Money markets and/or more liquid instruments, which allow them to “wait and see” what happens?
Put about $60,000. in US Treasuries today...$54,000. from our trust account, and $6,000. from my wife's Roth IRA. Got about 4.75% for six months...Boring, But I'll take it and wait.
Of course can bonds trade below par. All depends on the coupon rate, time to maturity, and the interest rates at which the future cash flows are being discounted.
You were right...It was 5.4%. I did the trades (early California time), then went back to bed/sleep...My bad.