Conversely, when the economy starts to decline, companies earnings will drop, and stock prices will plummet -- this is when investors want the safe interest payments guaranteed by bonds.
However, sometimes both stocks and bonds go up in value at the same time. This is usually because there is too much money, or liquidity, chasing too few investments, as is the case at the top of a market. It could also be the case when some investors are optimistic about the economys future, and buying stocks, while others are pessimistic and buying bonds.
Bonds FAQ
- What Are Bonds?
- What Types of Bonds Are There?
- How Do Bonds Interact With the Stock Market?
- How Do Bonds Interact With the U.S. Economy?
- How Do Bonds Affect Mortgage Interest Rates?

