why are bond prices and yields negatively correlated 
bond yields move in the opposite direction of prices because the bond s coupon rate is fixed but the appeal of that bond and its coupon rate on the secondary market changes with economic conditions if interest rates rise bonds issued with lower coupon rates become less attractive to potential buyers who could get a higher rate of return on a new bond subsequently the bond s price declines an investor who buys that bond at a discount will receive coupon payments on the bond s face value not its market value meaning their return will be greater than the official coupon rate yields decrease as bond prices rise for the same reason 