Why a 96 bp Error Can Move a 1,000 RMB Bond by 120 RMB
A recent question in the inbox: “A bond’s yield forecast was 96 basis points below the actual level. Why would that create a 120 RMB price gap per 1,000 RMB face value?” Behind that question are the three core ideas of bond investing: rates, price, and duration. If you understand those three, you can explain most bond price moves. ...