What affects bond prices?
The factors that play a big role in valuation and interest in government bonds are interest rate and inflation. If inflation is expected to be high, investors will demand a higher return on bonds. Country credit ratings indicate how stable economy is and thus also influence the government bond prices.
Risk and bonds
Finally, when investors are worried about the bond issuer’s ability to pay at the end of the term, they demand a higher interest rate. For the U.S. Treasury, the vast majority of investors consider the investment to be perfectly safe. Ten-year government bonds from other countries show that countries seen as more risky have a higher bond return. On the other hand, countries in which investors do not expect economic growth have a lower yield.