On a sunny spring day, a few hundred people gathered in the parking lot of the Hilton in downtown Nashville.
Some were dressed in red and black.
Others wore red and green ribbons with the word “Bond” written across them.
Some carried signs that read, “Let’s Make Bonds.”
The event was the fourth of its kind, and its organizers said it was aimed at giving the public a sense of what bond sales are really worth.
Bond yields have been rising over the past decade and they are set to continue to do so in the years ahead, according to a study from Morningstar.
The average yield on corporate bonds, which are typically a good investment, is 7.5%.
In some parts of the country, it is closer to 5%.
The interest rate on corporate and personal bonds, on the other hand, is currently around 3%.
The market is pricing the market for this market.
So the yields are really not high, at least not yet.
But the trend toward higher yields and higher rates is only likely to continue.
A recent study by the nonpartisan Committee for a Responsible Federal Budget found that the average yield over the next decade on U.S. corporate bonds is going to be lower than the average of 7.2% and the average for personal bonds is 3.9%.
The market is also pricing in the possibility of more negative interest rates in the future.
The Committee for the Protection of Investment’s annual report on the federal debt estimates that interest rates will increase from 5.3% to 5.8% by 2029.
In addition, the Committee for Responsible Private Finance’s report estimates that federal government debt will be $1.9 trillion in the next two decades, which is $1,000 higher than it was in 2016.
So far, the Federal Reserve has kept interest rates near zero, which means the market is expecting a steady rise in interest rates over the coming decades.
However, even if the Federal Open Market Committee holds off raising rates for the next year, bond yields are expected to keep rising.
And bond prices are likely to go up.
“I think it’s very likely that the market will continue to see a very, very high yield over time,” said Scott Johnson, a portfolio manager at Vanguard.
Johnson said it would be “a very difficult sell” for investors to sell stocks now.
“If you have a lot of debt, you can sell your stock at a discount,” he said.
Johnson also said the recent selloff could hurt the stock market.
“A lot of people will have to get out of bonds and buy stocks,” he added.
“There are some people who will be able to buy a lot more of stocks,” said John Schmitt, chief investment officer of B.P. Capital Management.
“And some of those people may be better off if they sell a lot.”
The latest bond prices were the latest on a week in which the S&P 500 closed down 0.3%.
It was the worst performance in more than two years for the index, which has lost more than half its value since the beginning of 2017.
In the same time period, the Dow Jones Industrial Average gained about 2%.
“I’m very bullish on the stock markets,” said Paul Bostrom, an associate professor at the Wharton School at the University of Pennsylvania.
“I think that’s going to continue, and it’s just going to get worse.”
For some, it may be too late.
Investors who buy into the bond market are being squeezed out by an influx of cheaper credit.
For others, the risk is that the yields on corporate debt will remain low, making bond buying a risky proposition.
Bonds are expensive, especially with interest rates on the rise.
According to Morningstar, the average cost of corporate bonds in 2017 was $22,600, compared to $17,200 for personal debt.
Investors are also paying more for bonds with higher yields.
The Federal Reserve, for its part, has signaled that it will not raise interest rates much further this year.
But analysts say that the pace of interest rate hikes could slow as the economy slows and inflation rises.
Borrowers are also more likely to hold out for a higher yield because they are less willing to pay a higher price, said Michael Leiter, a professor at Wharton who specializes in financial engineering.
“When rates are low, bond prices go up,” he told ABC News.
“We’re getting out of the trap of buying low and expecting the yield to be high.
And I think that the next few years will be very, much like the last decade.”– Follow Justin Fishel on Twitter: @justinfishel