VC10X - Investing, Venture Capital, Asset Management, Private Equity, Family Office VC10X Micro - Why Bond Yields Are Rising Again (And What It Means for Investors)
Global bond yields are quietly climbing again in late 2025—even as central banks start cutting short‑term rates. In this video, we break down what’s actually happening in the bond market, why the 10‑year government bond is so important, and what higher yields could mean for stocks, startups, real estate, and your portfolio.
Using simple charts and real numbers, we explain concepts like term premium, bear steepening, and duration in plain English, then walk through a few realistic scenarios for 2026 instead of doomsday predictions.
Key Takeaways
- Long‑term government bond yields in major markets have moved higher again, as investors demand more compensation for inflation and fiscal risk.
- This raises the discount rate used to value long‑duration assets like growth stocks and startups, putting pressure on high multiples even if earnings look strong.
- At the same time, short‑term bonds and cash‑like instruments now offer attractive yields, so investors finally have genuine fixed‑income alternatives to equities.
Glossary – Financial Terms Explained
- Yield: The annual return you earn from a bond, expressed as a percentage of its price. If price falls, yield rises, and vice versa.
- Basis Point (bps): One‑hundredth of a percentage point. 50 bps = 0.50%. Useful for talking about small rate moves precisely.
- Risk‑Free Rate: The yield on high‑quality government bonds (often the 10‑year US Treasury), used as the baseline return investors can get with very low credit risk.
- Yield Curve: A line that shows bond yields from short maturities (e.g., 3‑month) to long maturities (e.g., 30‑year). It summarizes market expectations for growth and inflation over time.
- Bear Steepening: A situation where long‑term yields rise faster than short‑term yields. It usually signals markets are worried about future inflation, debt, or growth risks.
- Term Premium: The extra yield investors demand for locking money into long‑term bonds instead of rolling short‑term ones. It rises when there’s more uncertainty about inflation, deficits, or who will buy all the new debt.
- Duration: A measure of how sensitive a bond (or stock-like asset) is to interest‑rate changes. Higher duration = bigger price swings when yields move.
- Investment‑Grade Bond: Debt issued by governments or companies with strong credit ratings, viewed as relatively low default risk.
- High‑Yield / Junk Bond: Debt from weaker issuers with higher default risk. They pay higher yields to compensate investors for that risk.
- Discount Rate: The interest rate used to convert future cash flows into today’s value. When this rate goes up, the present value of distant cash flows (like future startup profits) goes down.
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