Why is there negative covariance between future bond price and intertemporal rate of substitition?
Given bonds are a good consumption hedge, I would think that a higher intertemporal rate of substition (i.e., higher marginal utility from future consumption, i.e., lower incomes in the future) would correspond to a higher bond price.
I understand why the covariance would be negative for equities, which are a bad consumption hedge - I don’t understand why it would be negative for a default-free bond.
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