Undrstanding the relationship between Bonds and Interest rates. Help
I don't get it. Even after chatting with the AI, I dont get it.
I've heard that bond prices and interest rates have a relationship and that they move in opposite directions. I understand how the interest rate can influence the bond price, but for the love of God, I don't understand how the bond price can influence the interest rate.
The bank picks a value for the interest rate.
The bond market adjusts to this value. ok.
But how could this go the other way around???