interest rate volatility rising and yield curve steepening -> effect on callable bond

[releasets]

If the interest rate volatility increases, it would lower the value of a callable bond. If the yield curve steepens, the call option loses value which increases the value of a callable bond. What would be the effect if interest rate volatility rises and the yield curve steepens at the same time?

 

[Harrogath]

Unkonwn, depends on which effect is stronger.