- Wealth PMS
The RBI hasn't cut rates and bonds have been crushed. How bad is it, really? For bond funds, it's a drop across the board, as government securities dropped up to 2.5% in price.
The problem? Not that RBI kept rates steady. It was the change in stance to "neutral" from "accomodative". Why do Longer Term Bonds Lose More? Typically, people should pay more for a bond that is nearer term, compared to a long term bond. So a 1 year bond should typically yield lower (and have a relatively higher price) than a 10 year bond. There . . .