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If you buy a bond in the secondary market the
yield will be different then the original price. If the investor pays
a price higher the original price the yield will be less, but if the
investor pays less for the bond the yield will be higher. It is
because of this situation that the yield and price will move opposite
of each other.
The bond market is less risky then either the forex or stock market.
Traders will often buy bonds to lower their risk when either the forex
market or stock market are showing high risk. When this happens the
price of the bond will go up and the yield falls.
The forex market does effect the price of the bonds. The central banks
sell the bonds in there local currency so depending on the rate for
the currency so goes the price of the bonds. If there is a strong
demand for a certain bond then the money supply falls,a fall in supply
and an increase in demand results in an increase in price. This can
greatly effect the price and a countries currency.
If a trader sees a big increase or decrease in the dollar and the bond
market yields are going down or up it could be caused by a flight to
safety from large banks and trading firms. It is not necessarily from
traders selling or buying in the forex market.
Normally you would see news out that the bond market is moving which
would cause the dollar prices to spike. A trader can also watch the
dollar index which can indicate money is flowing into the dollar or
out.
Depending on what type of trades you like to make, screening the
different markets will always be to your advantage. Most stock brokers
will offer bond trading and have a services for screening the bond
market.
You can narrow down the amount of risk by screening the type of bonds you
would like to trade. Do some research on them and use the services of
your broker and you will be able to make some money in the bond
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