I understand that Bond Funds are just a portfolio of individual bonds, constantly being traded to manage mix and duration expectations of the fund.
What seems counterintuitive recently, though, is that, immediately following the Fed's 50 basis point interest rate reduction, bond funds such as FXNAX and BND prices fell. So interest rates dropped, and bond prices dropped. For nominal bonds those moves would be inverse to one another.
Can anyone explain why bond fund price can decline when interest rates go down?
Thanks
What seems counterintuitive recently, though, is that, immediately following the Fed's 50 basis point interest rate reduction, bond funds such as FXNAX and BND prices fell. So interest rates dropped, and bond prices dropped. For nominal bonds those moves would be inverse to one another.
Can anyone explain why bond fund price can decline when interest rates go down?
Thanks
Statistics: Posted by Kistle — Thu Oct 10, 2024 8:59 pm — Replies 2 — Views 145