Here are quotes from a report on Indian govt bonds â QUOTE 1 âIf you could look at the spread for five-year AAA versus the 10-year, the spread compression has happened more at the five-year AAA corporate bond as compared to the 10-year. Therefore I believe that there is some juice left on the ten-year AAA corporate bond as compared to the five-year.â My Question1 - Please explain what is spread compression, and why is less spread compression better QUOTE 2 âGovt has introduced small steps like exchange traded futures strips which will all go long way in deepening bond marketâ My Question 2 - What is exchange traded futures strips ,,,,,,,,,,,,,,,, Question 3 â What are the reasons why bond prices rise. I know one reason - its because IR may come down and everybody chases the higher coupon bond,. Is this another reason ? govt bonds are redeemed . Does this mean that there is more money in the system which automatically lowers the Interest Rate ? Or is it so that there are less bonds in the system so the value for bonds go up. Is this another reason ? If the ec is booming we can expect the bonds to rise. But Why ?