Investing in treasury bonds can yield higher expected interest returns than general monetary funds and bank deposits, and the possibility of principal loss is extremely small. Therefore, treasury bonds are favored by investors of all ages. Although the nominal price of government bonds is fixed, the price of government bonds is floating. So what does the rise in the price of government bonds mean?

1. Decline in market interest rates. Treasury bonds are interest rate financial products, and their prices have an inverse relationship with market interest rates. An increase in the price of treasury bonds indicates a decline in market interest rates. When market interest rates fall, investors will choose to buy more government bonds and sell other financial products. As the number of people buying government bonds increases, the price of government bonds will rise accordingly. In addition, the coupon rate of issued treasury bonds cannot be changed. In order to keep the bond interest rate consistent with the market interest rate, newly issued treasury bonds are usually issued at a premium, which means that the price of treasury bonds rises.

2. The expected yield of treasury bonds falls. The price of treasury bonds and the expected yield of treasury bonds also have an inverse relationship, that is, the higher the price of treasury bonds, the lower the expected yield of treasury bonds. Take a 100-yuan treasury bond with an interest rate of 5% as an example. When an investor purchases the treasury bond for 100 yuan, the expected interest income for one year is 5 yuan, and the expected yield is 5%. If the price of government bonds rises, the cost of purchasing government bonds increases, but the expected return on government bond interest remains unchanged, and the expected yield will naturally fall. For example, if the price of government bonds rises to 110 yuan, the expected yield will fall to 4.5%.

3. The coupon rate rises. The coupon rate of government bonds is the nominal interest rate. If the interest rate of government bonds is higher, the selling price of government bonds will also increase.

4. Changes in market supply and demand Changes in market capital supply will affect market supply and demand. When the demand for funds from investors such as enterprises decreases, investment in assets such as treasury bonds will increase, and the price of treasury bonds will therefore rise. I hope the above content about what the rise in Treasury bond prices means will be helpful to everyone. Warm reminder, financial management is risky, so investment needs to be cautious.