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Hi, I'm having difficult understanding why a Bear ETF for bonds will go up if interest rates go up. I mean if interest rates go up don't people pile into bonds because they pay more? Making them more attractive?
 

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Hi, I'm having difficult understanding why a Bear ETF for bonds will go up if interest rates go up. I mean if interest rates go up don't people pile into bonds because they pay more? Making them more attractive?
I have no idea about the bear ETF.
It depends on what type of bond index it is measuring.
I'm sure you know that these leveraged ETFs do not track their underlying indexes on a long term basis.

Regarding bonds in general, a rise in short-term interest rates (like the one set by the central bank) does not cause equal and perfect reaction in all types of bonds.
Current short term interest rate is just one of the many factors determining bond yields.
So your conclusion that a rise in interest rates will make people "pile into bonds" is not correct.

The only security that is guaranteed to yield more as a result of rise in short term interest rates are T-Bills and money market funds (net of expenses).

Methinks you are investing in something you don't fully understand.
 

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