Still not quite sure what the question is.
Posted on: September 11, 2022 at 21:48:40 CT
JeffB
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Are you talking about prices of the individual bonds & how that affects bond funds?
Or prices/inflation affecting interest rates?
If you are talking about how moves in interest rates affect the prices of individual bonds that is basically a mathematical formula.
If someone was looking to buy a bond and interest rates on a 10 year treasury went up to 3.5% he would pay less for one that was yielding 3%. The price of that bond would have to drop to the point that it would give him a 3.5% yield or he would buy one that was paying market rates.
On the other hand if someone had one paying 3.5% and rates dropped to 3% that bond would fetch a premium to the point that at that higher price it would in effect yield 3% for him all other things being equal.
Of course all of that would vary with each individual bond, quality & length of the term that was left etc.
The value of the bond fund would go up or down based upon the value of the underlying bonds in the portfolio.