The bond market and the stock market are two major parts of the financial system, and while they serve different roles, they are closely connected. Equity traders watch the bond markets very closely. Here’s a clear explanation of their relationship: 1.They Compete for Investment Capital Investors choose where to put their money — either in stocks (equities) or bonds (debt). When bond yields (interest returns on bonds) rise, bonds become more attractive compared to stocks. Investors may choose to buy …

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