Why Bond Yields Are a Key Economic Barometer | WSJ

by | Sep 29, 2022 | Invest During Inflation | 37 comments

Why Bond Yields Are a Key Economic Barometer | WSJ




U.S. government bond yields aren’t just a barometer of the economy, they also influence the cost of borrowing, from mortgages to student loans. WSJ explains how they work and why they’re so crucial to the economy. Photo illustration: Tom Grillo/WSJ

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37 Comments

  1. Chris DeAntonio

    I still don’t quite understand a fundamental concept here. If bond yields are rising, that means the price is going down (ie people are selling treasuries). If we think we’re headed to a recession, why would people be selling treasuries? Are they just fleeing to cash?

  2. John Kastner

    They kind of glossed over the part about when interest rates rise the value of your bond goes down, but then the yield goes up. Why is that?

  3. spider web

    indias situation with pakistani in the uk can have serious ramifications.
    boycott india now until this issue is fixed

  4. Zarp Sterr

    Bond yields going UP, are the death-knell of a debt-based society….now, look CAREFULLY….
    the yield on the BENCHMARK 10-yr Treasury has gone up from about 0.5% in Jan 2022….to over 3 % in Sep 2022 = that's a rise of 600 PERCENT since Jan 2022.
    =======
    It's like the Sword of Damocles coming down on Debt-holders.
    Couple that with a catastrophic rise in ENERGY prices…..and we have the perfect storm.
    Why ? Because wages / salaries have no chance of keeping up with that.
    =======
    What can you do ?…..NOTHING.
    What can the politicians do ?…..NOTHING.
    The only ones who can do anything are the Central Banks …. they PRINT EXTREMELY.
    They create HYPERINFLATION.
    What is HYPERINFLATION ?……Google search.
    ====
    Clue : It's more terrifying than invading armies.
    Think Zimbabwe. Think Germany after WWI.

  5. A Atreides

    lol at the disingenuous ending, it SHOULD bring prices down, but do they ever come down? I wonder why it cut right there.

  6. Lucy Bernardi

    I don't know which investment is the right one. I've always wanted to try something but I'm afraid it will end badly. I feel stupid for coming here for help. But, I'm sure that here I will get help from someone who is already investing

  7. FintechS

    @1:57 did you forgot to mention "before the bond matures" ?

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  10. jonson entered

    yakuza operate in japan inpune transfering corporate money into pedofilic pornography. nothing is done about it. 2 busy sanctioning the russians that DONT want lgbtq in they country. vote for ukraine who want nato in ukraine to force lgbtq on russia. 

    boycott japan now until yakuza is no longer institution.

  11. Hiếu Huỳnh

    why economy doing well then interest rate going up, it gotta be opposite

  12. Alex Ewo

    The example says the stock market rises with a rise in yields and yields rise with a rise in interest rate. How do people keep on investing in stocks instead of the dollar in a risk off scenario ? Like isn't the stock index market a negative correlation to the dollar index ?

  13. Just Me

    Love these short educational videos. Great stuff.

  14. Peter Stuart

    We are approaching the end of the long-term debt cycle. In my opinion in this phase, holding debt assets are super risky including bonds. There will be definitely devaluation of currencies which cuts the purchasing power of currencies. This defeats the aim of investing (preserving purchasing power & achieving growth)

  15. doitforfame

    the narrator shouldn't use the word "SHE" this video should be flagged for sexism. An investor can also be a He or an IT.

  16. Richard Walker

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  17. Jack Brady

    When you derive every possible capital investment you could possibly make, the one which is the ‘safest’, is the bond from the country with the strongest government (US). All investments are then analysed to that yard stick. That’s why it’s vital.

  18. GrownUpGaming

    If Fed cuts the fed funds rate, bond yields should decrease. However, since the economy is so strong, no one wants to tie money up in bonds, so shouldnt bond yields increase instead? Confused.

  19. Ali Smith hernandez

    why are you using she? did you just assume her gender!?

  20. maria sandra

    Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

  21. Ht Leong

    That's assuming that there are buyers

  22. Caroline eleanor

    Crypto currency and NFTs will outsmart the banking system in the nearest future serving as a global fiat. Already making over 85% profit from my current investment, all thanks to Mrs Karina Hilas.

  23. leetaiming64

    if the bond yield is affected by the interest rate which is adjusted by the fed, would it be safe to say that we can just look at the interest rate and ignore the bond yield when predicting economy performance?

  24. Augustus G

    bonds yields? there are several. The coupon yield, current yield which is calculated in the yield curve, yield to maturity, which is hoe much ppl get if they hold the bond to maturity. this calculation takes market price of the bond, and there is a realized compound yield. Duration and convexity are also important for bonds. there are also many types of bonds, ie, Z bonds, I bonds etc. this video covers the current yield of bonds.

  25. turbo time

    yakuza operate in japan inpune transfering corporate money into pedofilic pornography. nothing is done about it. 2 busy sanctioning the russians that DONT want lgbtq in they country. vote for ukraine who want nato in ukraine to force lgbtq on russia. 

    boycott japan now until yakuza is no longer institution.

  26. John Smith

    This is better than most content. But on a deeper level this still doesn’t explain anything. A word on the logic of risk might help.

  27. john gardener

    yakuza operate in japan inpune transfering corporate money into pedofilic pornography. nothing is done about it. 2 busy sanctioning the russians that DONT want lgbtq in they country. vote for ukraine who want nato in ukraine to force lgbtq on russia. 

    boycott japan now until yakuza is no longer institution.

  28. Paula

    It's incorrect to conflate a bond's coupon rate with its yield. These are two different metrics, and using these interchangeably is what's confusing.

  29. Santy V

    Well this is a great educational video ! Hats off to wsj. But I still don't get how higher bond yields can rise stock prices simultaneously because if cash flows have to be discounted at higher rate it will reduce the value of stocks theoretically right ?

  30. Frank E.

    2:04 "If the economy is doing well, interest rates may go up."
    So why are stocks going down and why is the news saying future profits are going to go down, as interest rates continue to rise in 2022,
    if higher rates are supposed to be indicative of a good economy?

  31. Trojan 79

    Best investment right now is Alibaba

  32. Tim VanAndel

    $40 annual coupon payment on a $1,000 bond would drop to $800 if interest rates rise to 5%. $40/.05= $800

  33. Adam

    Why would the interest rates go up when the economy is doing well?

  34. JP C.

    Nice to know and learn. Thanks so much for explaining this. It rises the cost of borrowing money, paying a mortgage for a house will be more expensive this year. So basically, for the sake of cooling down inflation the people who are paying for their houses will pay the price? Cheers.

  35. G John

    Thank you

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