lcw77

I havent read that section and dont have access to the materials but this is my take on it: Yields can move depending on rate expectations as well as re-allocation trades. The latter is what could make yields fall even when rates are increasing. For example if one thinks the economy might slow and enter recession in the near future, equities and other risky assets would trade down in which case investors might allocate capital to bonds seeking a safe haven, thus driving yields down. This would especially be true of a credit-risk free bond since credit considerations would increase in an economic slowdown.