Everything Everywhere Daily Bonds and the Bond Market
May 27, 2025
Dive into the fascinating world of the bond market, a giant in the global economy that often flies under the radar. Discover how bonds facilitate funding for companies and governments, influencing policies and potentially shaping governments. Unpack the relationship between bond yields and prices, and explore the intriguing realm of junk bonds versus U.S. treasury bonds. Learn about different types of government bonds and their crucial impact on the economy, making the bond market a pivotal player in finance.
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Power of the Bond Market
- The bond market wields major influence in policy and can intimidate powerful figures.
- James Carville said he'd rather be the bond market than president or pope due to its power.
How Bonds Work
- Bonds are loans from investors to issuers who pay interest and return principal at maturity.
- Bonds differ from loans as they can be traded on secondary markets like stocks.
Bond Prices and Yields Relationship
- Bond prices inversely correlate with yields; price up means yield down and vice versa.
- Changes in interest rates affect bond value, shifting prices to match new market yields.