** and bonds are two different investment instruments in the financial markets, and their nature, risk-return characteristics, and market performance are affected by different factors. The author recently found that when the purchase of ** rises, the bond will fall, so what is the relationship between them, is this inevitable?
* is a collective investment method, investors will concentrate their funds to the ** manager for investment management. There is a wide range of investments that can be made in a variety of asset classes such as bonds, money market instruments, commodities, options, and more. When ***, it is usually because the assets it invests in *** or the overall portfolio have received a positive return. For example, if you invest primarily in the market, then the overall market may drive equity up; If you hold a heavy position in a certain industry or company, the sharp rise in these will also lead to an increase in net worth.
Bonds
Bonds are debts**, which represent a kind of borrowing commitment from the issuer (usually, a company or financial institution) to investors, promising to repay the principal within a certain period of time and pay interest regularly. The ** of bonds has an inverse relationship with market interest rates. When market interest rates rise, the yield on newly issued bonds increases to attract investors, while the market for existing bonds is relative to the market due to the unchanged fixed coupon so that the real yield matches the market level. As a result, if the market expects interest rates to rise or the economic recovery leads to stronger inflation expectations, this could lead to bonds***
** Relationship between rising and falling bonds
*Bonds may move in the opposite direction in some cases, but not absolutely, in tandem or inevitably. For example:
1.Assuming that the market is in a bull market, the economy is growing strongly, and investors' demand for risky assets (such as **) increases, **type** may **; At the same time, in order to curb an overheated economy, the central bank may raise interest rates, which will lead to bonds***
2.Conversely, in anticipation of a recession or deflation, banks may cut interest rates to stimulate the economy, and bonds may fall due to expectations of future yields. However, the market may shrink due to poor corporate earnings prospects and other reasons, resulting in a shrinkage of stock-biased stocks.
3.If there are both ** investment and bond investment (such as balanced ** or hybrid**), its performance will depend on the respective performance and weight allocation of these two types of assets, and may not necessarily completely follow the law of "** go up and bond will fall".
* and bonds** changes are affected by multiple factors such as supply and demand in their respective markets, macroeconomic environment, policy adjustments and market expectations, and the two are not simply negatively correlated, but need to be specifically analyzed for each ** investment strategy and the market background to understand the dynamic relationship between them.
February** Dynamic Incentive Program