There are a lot of ways to explain why rising bond yields in this economic environment, but if you don't know anything about economics, think of it as your father talking about a sudden, strange ache in his left shoulder during Thanksgiving.
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Yields is a noun here. When they go up, especially when they go up a lot and quickly, it's like the economy is about to have a heart attack because we're extremely debt-focused.
The entire US economy is built on the foundation that USD borrowing costs are near 0. The government uses bond markets as an infinite money glitch (until now we could borrow at a profit), US companies are highly leveraged, and US consumers are highly indebted.
A significant portion of the US (and therefore world) economy is built on, to paraphrase George Carlin, US consumers spending "money they don't have on shit they don't need."
Basically how it works is people all over the world lend us money, which we spend on buying products from them.
I'm glossing over a lot because it's almost 2am and I should really get to bed, but if people no longer lend us that money (they stop buying dollars), there'll be a massive oversupply of dollars, which will lead to significant inflation. That will have a spicy effect on a lot of things in business.
Treasury securities have historically been considered safe because America has generally been a very stable and wealthy country. When the government starts cancelling contracts, the obvious question is if they'll keep the Treasury promises. The answer is "I hope so."
For the general public the yield represents the cost you're borrowing at, so its still an important number for them. Though I suppose America hasn't had to think about that ever
the part where things haven't gone to shit yet but it's obvious things are about to go to shit in an amazing way really sucks. makes you feel crazy for even saying shit to people.
Bonds are basically the lowest-risk and lowest-interest investment option available since you're lending to the Treasury: you're getting paid back unless the US government collapses. Investors are now scared enough of that possibility that they're pulling money out of the "safe" option.
Ah, okay. That part I can’t help you with. My first reaction when I read this was thinking, “Oh, their dad was out doing a lot of heavy lifting and now he’s sore? Are bonds getting… tired?” Then again, I’ve been awake for about 10 min so not firing on all cylinders yet.
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Sorry; I’m dumb too
The entire US economy is built on the foundation that USD borrowing costs are near 0. The government uses bond markets as an infinite money glitch (until now we could borrow at a profit), US companies are highly leveraged, and US consumers are highly indebted.
Basically how it works is people all over the world lend us money, which we spend on buying products from them.
Very confusing to the general public at this time.
the part where things haven't gone to shit yet but it's obvious things are about to go to shit in an amazing way really sucks. makes you feel crazy for even saying shit to people.
well at this point basically all virtue in the US?
Turned out three days later I figured out was not unhinged sounding enough.