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Posted On: October 27th 2026, 05:34 pm
Why do bond prices fall when interest rates rise?
Last Thursday the 10-year Treasury yield closed at 4.96%, its biggest one-day drop since 2024, which pushed bond prices up. Here's the mechanism:
Own a $1,000 bond paying 4% ($40 a year)? If new bonds pay 5%, nobody pays full price for yours. Its price falls to about $923 (10-year bond). If rates fall to 3%, it's worth about $1,085.
Longer bonds move more: a 1-point rise cuts a 30-year bond's price about 15%, a 2-year bond's only about 2%. Hold to maturity and you still get your $1,000 back, unless the issuer defaults.
Follow for plain-English money breakdowns, and find the full breakdowns on YouTube: Control Your Wealth (link in bio).
Illustrative: 10-year bond, 4% annual coupon. Yield data from the U.S. Treasury daily par yield curve. Educational only, not financial advice.
#bonds #bondmarket #bondprices #interestrates #treasuryyields #treasuries #yields #10yeartreasury #fixedincome #investing #investingforbeginners #investingbasics #personalfinance #financialliteracy #moneytips #financeeducation #learnfinance #stockmarket #wallstreet #fedrates #federalreserve #mortgagerates #bondinvesting #treasurybonds #financetips #moneymindset #wealthbuilding #financenews #marketnews #rates
Last Thursday the 10-year Treasury yield closed at 4.96%, its biggest one-day drop since 2024, which pushed bond prices up. Here's the mechanism:
Own a $1,000 bond paying 4% ($40 a year)? If new bonds pay 5%, nobody pays full price for yours. Its price falls to about $923 (10-year bond). If rates fall to 3%, it's worth about $1,085.
Longer bonds move more: a 1-point rise cuts a 30-year bond's price about 15%, a 2-year bond's only about 2%. Hold to maturity and you still get your $1,000 back, unless the issuer defaults.
Follow for plain-English money breakdowns, and find the full breakdowns on YouTube: Control Your Wealth (link in bio).
Illustrative: 10-year bond, 4% annual coupon. Yield data from the U.S. Treasury daily par yield curve. Educational only, not financial advice.
#bonds #bondmarket #bondprices #interestrates #treasuryyields #treasuries #yields #10yeartreasury #fixedincome #investing #investingforbeginners #investingbasics #personalfinance #financialliteracy #moneytips #financeeducation #learnfinance #stockmarket #wallstreet #fedrates #federalreserve #mortgagerates #bondinvesting #treasurybonds #financetips #moneymindset #wealthbuilding #financenews #marketnews #rates
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