Bond prices and yields act like a seesaw: When bond yields go up, prices go down, and when bond yields go down, prices go up. A bond that pays a fixed coupon will see its bond price vary inversely with interest rates. This is because bond prices are intrinsically linked to the interest rate environment in which they trade for example - receiving a fixed interest rate, of say 8% is not very attractive if prevailing interest rates are 9% and become even less desirable if rates move up to 10%. In order for that bond paying 8% to become equivalent to a new bond paying 9%, it must trade at a discounted bond price. Likewise, if interest rates drop to 7% or 6%, that 8% coupon becomes quite attractive and so that bond will trade at a premium to newly issued bonds that offer a lower coupon.