when risk of bonds increase, what happens to demand of bonds
Supply and Demand. When the economy sours, investors tend to move out of stocks and into bonds. In most free market situations, when demand exceeds supply, prices tends to rise. But when it comes to bonds, increased demand tends to cause the initial interest rate to decline.
First, the prices of bonds and interest rates move in opposite directions. If interest rates decline, the price of a bond goes up, and if interest rates rise, the price of a bond declines. Second, bonds with longer maturities incur significantly higher interest rate risk than those with shorter maturities.