This is a great breakdown of bonds and how they work, especially for those new to investing. The explanation of the risks and how the secondary market impacts bond prices is really clear. I think it’s important for people to realize that bonds aren’t just "safe" investments, and understanding their dynamics, like duration and yield changes, can really make a difference. I’m curious, what are your thoughts on how the bond market will shift if interest rates continue to decrease over the next few years?
If inflation will be under control and for that interest rates are allowed to go back down, that means that bonds with a long duration become a really attractive investment due to bond price yield relationship I showed in figure 2. The situation of inflation not picking back up and interest rates declining further seems actually quite likely, which would imply buying them. If thinking of this, assessing what inflation will do is key, as higher interest rates will be disastrous for holding such positions.
This is a great breakdown of bonds and how they work, especially for those new to investing. The explanation of the risks and how the secondary market impacts bond prices is really clear. I think it’s important for people to realize that bonds aren’t just "safe" investments, and understanding their dynamics, like duration and yield changes, can really make a difference. I’m curious, what are your thoughts on how the bond market will shift if interest rates continue to decrease over the next few years?
If inflation will be under control and for that interest rates are allowed to go back down, that means that bonds with a long duration become a really attractive investment due to bond price yield relationship I showed in figure 2. The situation of inflation not picking back up and interest rates declining further seems actually quite likely, which would imply buying them. If thinking of this, assessing what inflation will do is key, as higher interest rates will be disastrous for holding such positions.
Yes, i completely agree, thank you so much for the comment, let's connect!
I am always open to that!
I gave you a dm, let's continue our conversation!!