/biz/ - Business & Finance

>>54248542
Actually >>54248013 was a lot closer. I subsequently googled it and asked the chatbot about it. After being obviously wrong about it for a few messages, I managed to figure it out.

The thing is: the FED does not determine the bond interest rates. They determine their interest rates which banks use for lending/borrowing. When the FED rates are higher, the investors can get better returns from the banks, so the bonds yields have to rise to match that. Since the bonds have fixed coupons (interest rates), the only way for a bond to have increased yield is to buy it for less, so when yields rise, the bond values fall.

However, I can't find the data anywere on how much the value of the bond actually falls. Let's say there is a 1.5% 10Y bond for $1000. If the yield rises to 4%, what will be the new price for that bond?