What Effect of steadily declining interest rates on the secondary bond market is?

Answer 1

Steadily declining interest rates typically lead to an increase in bond prices in the secondary bond market. As new bonds are issued at lower rates, existing bonds with higher interest rates become more attractive, driving up their market value. This can also result in increased demand for bonds, as investors seek to lock in higher yields before rates fall further. Conversely, falling rates may lead to reduced yields for new bond issuances, impacting the overall return for investors in the long term.