We are taught that when LTEG goes up real interest rate goes up because We have to induce people to save. But we also read that When LTEG goes up, Credit Ratings improve and therefore credit spread narrows and bond prices ...Read more
We are taught that when LTEG goes up real interest rate goes up because We have to induce people to save.
But we also read that When LTEG goes up, Credit Ratings improve and therefore credit spread narrows and bond prices go up. But if Real interest rate improves, How can bond prices go up?
Are we talking about Corporate Bonds? Or are we saying that even when real interest rate rises overall interest rate falls because of Improvement in credit Risk?
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