An increase in interest rates will lead to a decrease in bond prices. This is because the bond interest rate is fixed. When the interest rate rises, in order to ensure that the bond yield is consistent with the bond yield, the bond price can only be reduced. Simply put, an increase in interest rates will lead to a decrease in bond prices because the bond interest rate can only be greater than or equal to the general interest rate. When the bond interest rate is fixed and the general interest rate falls, bonds need to reduce the bond price to improve the bond yield, so that bonds have their investment significance.

First, the impact of rising interest rates.

1. capital: the rising interest rate will increase the borrowing cost of borrowers, and the burden of those who lack capital will also increase;

2. Economy: The income of all residents is generally divided into expenditure and deposit. The increase in interest rates will lead to an increase in deposits and will also reduce residents' desire for consumption;

3. Exchange rate: When interest rates increase, loans and consumption decrease, prices will also decrease accordingly, which will also lead to an increase in exports and a decrease in imports. The demand for foreign exchange will also decrease, and the exchange rate of foreign exchange will also decrease.

Second, there are three relationships between market interest rates and bond prices: long-term bond prices fluctuate in the same direction as interest rates; The price of national debt is less affected by the change of interest rate; The greater the fluctuation of short-term interest rates, the smaller the impact on bond prices.

Market interest rate and bond price are the relationship between interest rate and bond price. There are three situations. The first case is the long-term bond, whose price fluctuates inversely with the interest rate.

For example, for bonds with a face value of 1000 yuan, coupon rate's is 9‰, and the repayment period is 30 years. If the market interest rate is also 9‰, then the bond price is exactly equal to its face value. But if the market interest rate is raised to 14%, the price of this bond is only 650 yuan.

In the second case, the price of national debt is less affected by the change of interest rate, because the repayment period of such bonds is short, and the national debt can be paid off quickly in this short period, or the old bonds can be replaced by new bonds in a short period of time.

In the third case, the greater the fluctuation of short-term interest rates, the smaller the impact on bond prices. For example, for a one-year bond, even if the interest rate is raised by 2%, the bond price will only drop by 2%.

The market interest rate is determined by the relationship between supply and demand in the capital market. Market interest rates often change due to changes in supply and demand in the capital market. With the market mechanism playing a role, the supply and demand of credit funds will gradually tend to be balanced due to free competition. The market interest rate in this state is the "equilibrium interest rate", which corresponds to the official interest rate, which refers to the interest rate set by the monetary authorities.