If nominal interest rates decrease, what is the most likely immediate effect on existing bond prices?

When nominal interest rates decrease, existing bond prices typically increase. This happens because existing bonds have fixed interest payments, and if new bonds are issued at lower rates, the older bonds become more attractive to investors. For example, if you own a bond that pays 5% interest and new bonds are only paying 3%, people will want to buy your bond for a higher price to get that better interest. As demand for your bond rises, its price goes up. Therefore, a decrease in interest rates generally leads to a rise in the prices of existing bonds.