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What happened to interest rates and stock prices during the 2008 Great Recession?

What happened to interest rates and stock prices during the 2008 Great Recession?

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Answer #1

During recession the Bonds became very risky as debt repaying capacity of companies decreased, hence the interest rates went up due to increased risk. The yield curve of Treasury bills became inverted, hence short term interest rates of treasury bills increased.

Stock Prices fell due to many factors like
1. Lower profits and cash flows of companies
2. Collapse of very important investment banks like Lehmann Brothers.
3. Lack of liquidity in the market also caused stock prices to fall

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