Revisiting Bonds: The Interest Rate Conundrum
The Federal Reserve’s recent attempt to tame inflation has resulted in a sharp decline in bond prices. The current situation is incredibly unique. Through May 31, 2022, core bonds, as represented by the Bloomberg US Aggregate index, have fallen over 10%¾the largest fall coincident with a market selloff since at least 1962.
To better understand the complexity of the current situation, let’s start with why bond prices decline.
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