As we know the current interest rate around the world are rather low. Rising the interest rate are quite unlikely at this point of time.
Moreover, Interest rate for US which is within 0-0.25%, Europe 0.5% and Japan within 0-0.1% are at their historical low.
Therefore, rising interest rate will definitely affect the bonds. And Bond investors will start asking, how and what should they do, if the interest starts to go up?
One way is to monitor US Fed movement & under these 2 conditions, Fed will choose to raise the interest rate.
It will be solely base on unemployment rate and inflation.
Should the unemployment rate falls under 6.5% and inflation is over 2.5%
And there’s a possibility in Year 2015, both conditions will be met.
Bond Investors should be alert, when these 2 conditions are met.