Three myths about the bond market The era of declining interest rates may have come to an end, and many investors don't The article discusses three myths about the bond market: 1. Safe Bonds Are Risk-Free Bonds: The article explains that even bonds with a low probability of default, like US Treasury bonds, are not entirely risk-free. Longer-term bonds can experience greater price volatility when interest rates change, making them not truly riskless. Even short-term bonds, like three-month Treasury bills, are not entirely riskless, as they can expose investors to inflation risk or varying interest rates. 2. Federal Reserve Policy Determines Long-Term Interest Rates: It challenges the myth that the Federal Reserve's short-term rate decisions significantly influence longer-term interest rates. While there might be some short-term impact around Fed announcements, the article argues that macroeconomic factors, supply and demand for bonds, debt levels, inflation expectations, and t
