It works like this. Say you buy a $100 bond that pays $5/year in income. It yields 5%. If a new bond out there is issued for $100 but pays $6/year, or 6%, then you won’t be able to sell anyone your bond that only yields 5%. You could if you sold it at a 6% yield, or $99. Thus, your bond resale went down as the yields go up.
So, when yields are high, many times, it’s better to buy bonds than stocks. Your yield is high, the bond value has more upside value, and you can achieve a higher rate of return. For example, to get a 10% yield, you can buy that same original $100-5% yield bond for $95. As yields come down, your bond increases in value to compensate for the lower yields.
