Bond Market Rollercoaster

Alright, it's not the death-defying coasters at some theme parks, but the bond market definitely goes up and down with daily fluctuations.

Long-term bond interest rates fell below 5% yesterday and ended up at 4.98%. Just the other day, it was at 5.13%. Not too long ago, it was at 5.25%. The Federal Reserve Board hasn't met since all this happened, so who or what is responsible for this?

The answer is--the same people responsible for the ups and downs in the stock market. Everyone who trades in the bond market; from the biggest buyer and seller, to the smallest.

Supply and demand controls the bond market. As demand comes into the bond market and more people buy bonds, bonds go up in price and interest rates go down. When more people sell bonds, they go down in value and the interest rates go up. It's really that simple.