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Bond Market Funds U.S. Government: Treasury Yields SURGE Pushing U.S. Dollar, Borrowing Costs Up
In the past few weeks, the U.S. bond market has experienced a significant surge in yields, leading to a domino effect on various economic indicators. As Treasury yields rise, the value of the U.S. dollar has been pushed higher, while borrowing costs have also increased. These developments are being closely watched by investors and economists as they have the potential to impact the wider economy.
The bond market is an essential component of the financial system. It allows governments, corporations, and individuals to borrow money in the form of bonds, which are essentially IOUs. When bond prices go up, yields go down, and vice versa. Changes in bond yields have wide-ranging implications for mortgage rates, business borrowing costs, and even currency exchange rates.
With the recent surge in Treasury yields, the U.S. dollar has seen a notable appreciation. This is because higher yields often attract international investors, looking for better returns on their investments. As demand for U.S. bonds increases, the value of the dollar strengthens. On the surface, this may seem positive for the U.S. economy as a strong dollar can attract foreign capital and potentially stimulate economic growth. However, a stronger dollar may hinder U.S. exporters by making their goods more expensive for foreign buyers.
Moreover, the surge in Treasury yields also affects borrowing costs for the U.S. government. As yields rise, the government needs to pay more interest on its outstanding debt. This translates to higher borrowing costs which could have implications for government spending, especially in areas such as infrastructure and social programs. Increased borrowing costs may also lead to upward pressure on interest rates, making it more expensive for businesses and individuals to borrow money.
The surge in Treasury yields can be attributed to a variety of factors. Firstly, improving economic prospects and expectations of higher inflation have fueled expectations of tighter monetary policy. This has led to investors demanding higher yields to compensate for the perceived increase in risk. Additionally, the U.S. government’s increased issuance of debt to fund fiscal stimulus programs and economic recovery efforts has flooded the market, creating an oversupply of bonds.
Investors and economists will continue to closely monitor the bond market and its implications for the broader economy. The surge in Treasury yields, pushing the U.S. dollar higher and increasing borrowing costs, can have both positive and negative effects on different sectors. As the economy gradually recovers from the impact of the pandemic, these developments will play a crucial role in shaping future economic policies and investment strategies.
In conclusion, the recent surge in Treasury yields in the U.S. bond market has led to an appreciation of the U.S. dollar and an increase in borrowing costs. While a strong dollar may attract foreign investment, it can also hurt American exporters. Higher borrowing costs could strain government spending and make it more expensive for businesses and individuals to borrow money. As economic conditions continue to evolve, policymakers and investors need to carefully navigate the implications of these bond market movements to ensure sustainable economic growth.
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Нравиться спокойный, понятный английский. И как хорошо соединить приятное с полезным. Всем удачи.
You should be telling people U.S.bonds will become junk.
Supply of bonds is the issue!
As we witness the current economic landscape, it's becoming increasingly clear that we're entering a recession. These times can pose significant financial challenges.
Thanks Lena for the great economic analysis you're providing. I enjoy listening to you everyday to stay on top of the US news and see what's going on economically and financially, but I'm not sure how these episodes would help me understand what's going on in Canada (where I live) or around the world? Would it be possible to spend a few minutes of your programs to relate your analysis to these areas? Thanks
With the current economic situation, it's hard to ignore the possibility of a recession looming on the horizon. I'm genuinely concerned about how it will impact people's finances.
Great information… you have me so interested In finance… thanks
@2:31 Yes, to meet the US govt's need for more borrowing and to strengthen the usd. Since mid July the usd has gone on a meteoric rise vs all major currencies, I believe this was intentional for the following reasons: 1) the US runs the largest trade deficit among developed countries so dollar strength eases inflation, 2) it shows europe and BRICS that the usd is still king of the hill.
That said, all majors have recovered from their recent troughs except the ruble so the currency traders have taken the profits from their long positions except the ruble shorts who are still holding on.
So if you make you money from exports then it is a bad time for you but if you make it from imports it is a good time. So are those goods more perishable than the dollar they are exchanged with?
This was a pretty good video but I’m a guy and I need visual charts with hypothetical examples LOL
Biden and his political party seem determined to destroy the US through inflation, mismanagement, and crazy policies. In the last days of the Roman Empire most of the Empire's wealth had been squandered, and the emperors used what little silver was left to pay the soldiers who were enforcing their will. Anything the Empire had of value was parceled up and sold to the Emperor's friends, to finance his pet projects. It sounds so much like today!
곧. 세계 3차 전쟁이. 일어난다
세상은. 지구종말. 끝. 시간앞에
와 있 다
마지막. 순간앞에. 서있다
어마어마한. 대환난시작이. 시작된다
폭 풍 전 야 다
이제는. 하나님의. 때가. 되었다
그동안. 지금까지의. 예언과 계시와 말씀도
이제는. 막을 내릴 때가. 되었다
하나님께서. 부활휴거 버튼을. 누루시려고
일 어 서 셨 다
사람들이 상상할수없는. 많은. 일들이
일어날것이다
우리사람들의. 모든죄값을. 대신받으시고
십자가에서. 처참하게. 대신죽어가신
예수님흘리신. 피값앞에. 엎드려
진심어린. 회개와함께
살아서든. 죽어서든. 천국에서. 만나는
영혼 영육. 이. 되기를. 간절히. 기도드린다
아. 멘
((( 예수님은. 하나님의. 친. 외아들이시다 )
아. 멘
P's (1). ;; 대환난에. 남은사람들은
죽으면죽으리라. 심장을가지고
((( 짐승표 지옥표 666표를. 절대로 절대로
받으면. 안된다. )))))
P's (2). ;; 이스라엘은. 대환난중에
민족적. 회개와함께. 마지막
하나님뜻을. 마무리하는. 구원의 순교의
나라가된다. 환난순교. 사명자들과함께. ))))
아. 멘
Lina, you make the case to "starve the beast" (government) a phrase coined in the Reagan administration. The primary benefit to Americans is a return to our constitutional republic and the death of this democracy. Few people know the difference.
Liberty is dangerous buI I will lovingly and happily embrace it over the false promise of safety.
Such a calming presentation style. Refreshing.
The collapse in Treasury bonds now ranks among the worst market crashes in history
YOU ARE DELUSIONAL! BIDENOMICS HAS DESTROYED OUR ECONOMY! LET'S GO BRANDON! FJB!
Dear Ms Petrova, just a simple question: how long and how high may the US increase its debt? Is there any ceiling, any limit? Or money may be printed limitlessly or some reset may be done? Mean debt erasure? Thanks for reply
I invest in stocks, but I remain on the sidelines now. Thanks for the bond explanation. I will be watching this video a few times.
Even if bond yields are rising while stock prices are decreasing, the markets are still skeptical whether the Federal Reserve will stick to its goal to raise interest rates until inflation is under control. As I'm still debating whether to sell my $401k worth of equities, what is the best way to profit from the current down market?
People have had enough of the fake market
Here's a question for you Lena which no one is yet covering. The Fed auctions its bonds off to investors, but what happens if there aren't enough buyers for that debt ? Obviously the Fed steps in to buy that debt which is effectively money printing. We have an issue at the moment where the largest purchasers are actually selling off their USD debt Japan China and Saudi, so if they aren't buying then who is (reverse repo facility) and how much debt can the market swallow?
This seems to not be going in the right direction. However, buying gov bonds seems to be the best thing to do at this time. But if the gov keeps printing more cash then that hi yield is really meaningless. What I dont understand is why precious metals are dropping so much. Usually dollar drops precious metals goes up.
I like your short and to the point videos.
All this is unconstitutional all debts are to be paid in silver or gold not paper! Also each state is to have a Republic form of government! So all of you are committing treason! Ignorance of the Law is no excuse!
Why would anyone worry about buying Treasury bonds when the Anerican economy is backed up with a $34 trillion dollar debt?
موضوع این هست که قفقاز و ارمنستان و نخجوان بعد از لغو گلستان و ترکمن چای باید به ایران بر می گشت و از استان های ایران هستند و همه ایران هستند.
I am calling out the next step of this staged demolition: the wealthiest mutual funds which own basically most of the western corporations, will generously offer theirs help as long as CBDC is made mandatory for everyone, making them legally owner of the US economy, and by extension the western world.
No doomsday predictions from me. I do forecast more and more inflation. The middle-class will be robbed. Which has always been the plan. Best wishes from Iran
US inflation is what is driving the current rate levels. There is also global inflation as well. In the short term, US Treasuries have to compensate for dollar purchasing power reduced by inflation. That is done by interest rate increases. The expectation of inflation over longer periods of time drive the interest rates of longer maturity US Treasury debt. Rates are set at auction. The rate the US government pays rises until all of the debt being offered is sold. The average actual maturity of a 30 year mortgage is 7 years tied to sale of the house. So the 10 year Treasury is a benchmark for setting 30 year mortgage rates.
As US sovereign rates increase, persons with investable funds seek the highest global returns and buy more US Treasuries. This increases the demand for US dollars to pay for the security. The increased demand for dollars relative to other currencies causes the US Dollar to strengthen in global currency markets. Imports are cheaper as a result and exports more expensive.
The only rate the Fed sets is the rate it will pay banks who need to borrow from it. By raising that rate it forces banks to not borrow from it except as a less attractive source of funds. Banks raise deposit rates to attract funds and also lending rates to cover those costs. The deposits will come from other markets like stocks and commercial bonds.
Historically, the Fed Fund rate has been 2% to 3% with a low Fed balance sheet. The Fed balance sheet is the sum of all the loans to banks and now to large corporate borrowers.
Finally, parties in international trade have to agree on the currency that will be paid for goods delivered. Often the choice is the US dollar. There is the Petro Dollar and the Euro Dollar as a result. These are US dollars used by foreign companies and countries for transactions in international trade. There is no US company or agency involved. Interest rates control the total amount of USD available in international markets for use as a settlement currency.
Thank you for your valuable analysis.Lots of love from India.
Why does a high long term bond yield cause the dollar to strengthen? If the reason the yield is high is that the government has massive debt it can never repay, why would the dollar be more valuable against other currencies?
thank you!!!!
You truly are as beneficial as you are attractive. With only 17 states mandating Financial Literacy course to graduate you'd be considered a national treasure in a classroom based on your knowledge and your communicative skills that makes the subject easily comprehensible.
this is something i stumbled into not what you do but could really effect all
BREAKING: WHISTLEBLOWER DROPS HARD EVIDENCE, BIDEN, OBAMA, HILLARY EXECUTED SEAL TEAM 6, AUDIO PROOF
I am not trust this information, US government is lier
Thank you for your information. As a US treasury long term notes Debt bond Holder your information stands straight to my expectations.
Not a US nor a RUSSIA citizen. BUT personally, I think the bond/interest etc would be better economics THAN giving 75 billion to Ukraine. because it will hits my country market also…This is my view.
Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them.
Stop paying taxes
The FED is weaponising the dollar to fight BRICS
Great job..Lena..Pls give more talk on how to buy safe bonds ..? Safe investment ways for old people..thnx.
Bond is like fixed deposit, which is already calculated how much to pay, 10 years bond means higher returns, which causes inflation to go up