What happens to bond duration when interest rates increase
31 Aug 2017 Effect of interest rates on bond prices: interest rates rise A duration 2 ETF drops about 2% in value if interest rates move up by 1%. The recovery occurs because the ETF will invest in new, higher yielding bonds after the 7 Apr 2015 Unless interest rates rise (and bond prices fall), the short position will experience negative total returns due to the impact of negative carry. One