bond market crash

A bond market crash occurs when the prices of bonds drop sharply and quickly, often due to investors losing confidence and selling off large amounts. Bonds are debt securities that pay fixed interest, so their prices are inversely related to interest rates. When interest rates rise rapidly, existing bonds with lower rates become less attractive, causing their prices to fall. This sudden decline can lead to widespread losses for investors, increased market volatility, and potential ripple effects on the broader financial system. Essentially, a bond market crash reflects a rapid shift in investor sentiment that disrupts the normal bond trading environment.