If market interest rates increase after a bond is issued, the market value of the bond is decreasing.
A bond is a fixed income debt instrument. The bond issuer pays investors interest rates and at the end of the investment period, the bond issuer pays the investor back her principal.
The value of a bond and its interest rate is inversely related. When the interest rate of a bond increases, the value of the bond decreases and when interest rate decreases, the value of the bond increases.
For example assume that the interest rate of a one-year bond with face value of 1000 is 5%. The value of the bond is 1000 / 1.05 = 952.38. If the interest rate increases to 8%, the value of the bond becomes 1000 / 1.08 = 925.93.
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