When you buy a bond, you're lending money to the borrower, who agrees to make regular, fixed interest payments. When the bond matures, you get your principal back. Bond traders can't change a bond's income payment. But they can bid the price of the bond up or down. Simply put, bond yields rise when prices fall, and vice versa.
Bond traders fret over good economic news, and dance little jigs at bad news.
Because if the economy grows too quickly, inflation can rise. And inflation erodes the value of a bond's fixed interest payment. So blame the bond market's misery on prosperity. Even counting their higher interest payments, many bond funds posted negative returns in 1999. Of course, if you don't sell your bond fund shares, you don't have to worry about changes in the share price.