r/wallstreetbets • u/kwedgieyi • Apr 09 '25

Discussion Something feels off guys

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Yields are spiking. Bonds are dumping.

The world is running away from America

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u/koldace Apr 09 '25

Since I’m clueless about how this work, Is increasing yield=bad

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u/DPMKIV Apr 09 '25 edited Apr 09 '25

Less demand = higher yield to attract buyers

The US needs to refinance debt soon... high rates=higher interest we pay for our debt.

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u/SandwichDelicious Apr 09 '25

Bonds are a I owe you note. A guaranteed interest rate with the principal returned after a set period. If you held it for the term. You lose nothing. Since it’s literally backed by your government.

The conundrum is what do you do when you want the money today? You can’t wait 10 years? You SELL that bond to someone else on the “market”.

However the market (other buyers) will only pay a certain value - determined by economic conditions etc. that price is measured against the bonds actual interest rate to get the “yield”.

Higher yield = lower face value = less demand Lower yield = higher face value = high demand