Predictions on Bond Market Crash

I mean… look in the rearview mirror..

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More likely? Bruh it has already happened. Aren't they down more than stocks were in the 2008 crash?

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TLT was down 30% last year and down 15% this year. I would say we are currently in it.

Are you speaking of funds like AGG ?

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Looking at the state of the bond market and the likelihood of yields increasing, I’m concerned an event is more likely with each passing day.

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Huh? Yields are surprisingly high, given the inflation data and fed projections, so I’m not sure why we expect them to go even higher and have a bigger price crash, when if anything, I think the opposite is more likely.

Yes, they mature at par.

Yeah. I'm a toddler when it comes to finance, so bonds 'crashing' I'm not grasping. When stocks crash, they say go from $100 a share to $25 a share. If you buy a 1 year $100 bond for $97, you get the full $100 at the end of the year. Now, the month after you buy the bond the price may drop to say $90. You don't make as much with the bond you bought but you didn't lose money. It can't 'crash' unless you sell early and get less than $97. So, for the market to 'crash' is that suggesting that people invest in bonds with the only intent to sell as the price of the bond goes up before the mature date, and they are losing their arse because the value of the bond has dropped?

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So regarding municipal bonds, if you buy at say $100 yielding 4%, and the value of that bond goes to $95. Are you getting paid 4% interest on the original $100 you bought it for or are you now only getting 4% on the current value of $95 resulting in a lower yield until the value goes back up?

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You get 4% on the $100. However, it will actually give you a higher yield.

Yield=coupon rate/price.

Flight to quality today

Bond ETFs getting flows

Not sure how that works with a technically closed bond market

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If you have the time span to hold the bonds to maturity, does it really matter what the values do? Honest question because I have a bunch of municipal bonds in my portfolio and my understanding was that as long as I hold them to maturity I get face value back plus all interest it produced. It is, however, very unnerving seeing the beating these bonds are putting on principal balance.

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Take a look at Federal Tax Revenue and Federal Spending. Notice how they're heading in opposite directions, and fast? The declining face value of long bonds is represented by the growing gap between those numbers. That gap will get covered with printed money which devalues the purchasing power of your bond at maturity. The difference in size of that gap between when you purchased the bond and maturity represents your corresponding loss in purchasing power.

The nominal value of your 30 yr bond remains. Let's say you have a $100k 30yr bond and you plan to buy a $100k car with it at maturity. You will absolutely be able to do so but you'll probably be disappointed when it turns out it's a used Corolla instead of a new 7 series.