Bold yields seem to be 1-2%. I read that in the 60s and 70s, 10% bonds were quite common. What is the reason behind this change?
In: Economics
The short answer is: The more people buy bonds, the more the price goes up. The more the price goes up, the lower the yield is. When the stock market goes through a rough patch, people sell stock and buy bonds which are a much safer bet than questionable stock in a volatile market. This unfortunately also leads to stock value dropping, which only leads to more people selling stock and buying bonds.
Now, the good news is as stocks fall you’ll start seeing investors grabbing up stocks for pennies (not literally usually) at which point the market will be revitalized some with a surge of people selling bonds to get dirt cheap stocks. When this happens, yield will begin to rise again for bonds as there will be less people buying and more people selling.
This is an oversimplified explanation. Someone with an economics background could give a more in-depth explanation which would likely include other factors, but this is how it was explained to me and it makes sense to me.
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