Economics Bonds Questions
The impact of economic cycles on bond prices is significant. During periods of economic expansion and growth, bond prices tend to decrease as investors shift their focus towards riskier assets with higher potential returns. This is because rising interest rates and inflation expectations reduce the relative attractiveness of fixed-income investments like bonds. Conversely, during economic downturns or recessions, bond prices tend to increase as investors seek safe-haven assets and the demand for fixed-income securities rises. Additionally, central bank policies and market conditions also play a role in influencing bond prices during economic cycles.