Money and Equity Market Relationships

It can be seen as evident that the yields from government bonds in the bond market will be affected by the other markets.

The money market rates of interests of course provide what is called the anchor for the yield curve in the bond markets.

There is also interesting comparisons with the equity market and this can be seen in terms of some sort of competition; when there is a downturn in the equity market people will plough into bonds more and vice versa when there is an upturn in the markets then people will consider equity investing again and the bond market might appear less attractive.

Therefore this relationship between where people choose to put their money based on prevailing market conditions and sentiment is another interesting area and one that shows another side of the confusing entanglement relationship that exists between the various markets and what happens as a result.

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