Bonds issued by the US government generally have low credit risk. However, Treasury bonds (as well as other types of fixed income investments) are sensitive to interest rate risk, which refers to the possibility that a rise in interest rates will cause the value of the bonds to decline.
Are bonds safe if interest rates go up?
Rising rates have hit long-term bonds the hardest. But the recommendation to avoid duration or interest rate risk is backward-looking and probably comes too late. … However, it’s equally likely that yields will rise less than expected, in which case long-term bonds would do better.
Do you buy bonds when interest rates are low?
In low-interest rate environments, bonds may become less attractive to investors than other asset classes. Bonds, especially government-backed bonds, typically have lower yields, but these returns are more consistent and reliable over a number of years than stocks, making them appealing to some investors.