When eco is under pressure, inflation is low, the government tries to revive it by cutting Interest Rates. So obviously there will be bidding for bonds which were taken at higher Interest Rates and bond prices will rise, and yields will fall. Q1 - The Fed has a measure of pushing the call rate below reverse repo rate to create more Liquidity. Exactly what does this mean. Q2 - More liquidity means I rates will remain low only, so I assume there is still demand for the 7 % Bond. Can you tell me the exact relationship between Liquidity generation and the resulting movement in the bond market ? Q3 â Expectation of recovery in equity keep bond markets up. Why does this happen ? Q4 â But Once the economy starts booming, inflation will go up and bond markets will fall. Why does this happen ? Q5 â So am I to understand that the bond market peaks out before the equity market.