Short #001 · Bonds & rates · Sep 25, 2026
Why Bond Prices Fall When Interest Rates Rise
Why do bond prices fall when interest rates rise?
Your bond didn’t change. The world around it did. When new bonds start paying more, an older bond paying less is a worse deal, so its price has to fall until it’s just as attractive.
Sources
- Example numbers are from the SEC's Investor Bulletin "Interest Rate Risk, When Interest Rates Go Up, Prices of Fixed-Rate Bonds Fall" (Example 2)
- More on duration from FINRA
Educational only. Not financial advice.