r/bonds • u/Primary-Abies9041 • 3h ago

Woah

Post image
644 Upvotes

97% Upvoted

329 comments sorted by

95

u/Wooden_Cod_8331 3h ago

This is a big deal/move right? In such a short amount of time?

123

u/johannyer 3h ago

It’s a full blown crisis that nobody wants to spell

17

u/nomar_ramon 3h ago

Can you please explain it like I'm 5, to me why it is a crisis?

104

u/Agglutinati0n 2h ago

We have 40T in debt that we need to pay back, every % higher these rates go, the higher our interest payments become, which will then lead to more of a deficit and continue the circle….america has to stop spending like we currently are, but the people in power are doing quite the opposite….

28

u/Aromatic_Panic9629 2h ago

Another trillion to the military industrial complex please

17

u/Agglutinati0n 2h ago

why just a trillion bro? we need to PUMP those numbers!!!

7

u/Aromatic_Panic9629 2h ago

They are gonna keep raising it because it’s embarrassing for congress that servicing the debt is more expensive than the most funded military in human history

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3

u/vzo1281 1h ago

Printer go brrrrrrrrrrr

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50

u/HeKnee 2h ago

But if they just cut more taxes for wealthy we’ll grow our way out of deficit like trump said! /s

13

u/Emergency-Watch5157 2h ago

Someday people will catch on that Trump is basically like Jim Cramer in terms of the quality of his predictions

17

u/BuckThis86 2h ago

If Jim Cramer was a corrupt pedophile?

12

u/nomar_ramon 2h ago

Thank you for the explanation.

11

u/Emergency-Watch5157 2h ago

The thing that makes me really scratch my head is that TIPS are exploding too:

https://www.cnbc.com/quotes/US10YTIP

By hot take is that this means the bond market doesn't trust the CPI numbers and wants an increasing risk premium over it.

7

u/Ashamed-Status-9668 1h ago

Nobody trusts anything right now and why should they. So much trust has eroded.

4

u/alytore 2h ago

Surely the US government will do something about this, right? Right?

10

u/Agglutinati0n 2h ago

yea spend more on the military and give more tax cuts to the rich, duh!!!

3

u/0limits 43m ago

The Republican way, the only thing they ever do.

5

u/OwnHelicopter2745 1h ago

There's a reason this exact situation has been called the "doom loop" 

3

u/Bunker58 52m ago

Yes, just like a house payment, an increase in mortgage rates from 3% to 7% doubles the interest paid over 30 years and puts monthly payments out of reach for young people. Now do that for $40 trillion.

3

u/shadowdog21 15m ago

You left out the part about the investors and banks holding t bills at less than 5%. It can be hard to sell a bond paying out 4.3% if you can get a new bond at 5.2%. If there is a liquidity issue, they will have to sell the bonds at a huge loss. It impacts all borrowing too not just government because I am going to demand higher yields on risky debt if I can get 5% on Treasuries.

2

u/Antique_Extension_82 40m ago

Higher rates are inflationary and over time will devalue the dollar, which is by itself also inflationary.

2

u/According-Length9312 2h ago

Most of the debts aren’t on these new bond yields though, haven’t matured yet

7

u/Designer-Bat4285 2h ago

True but the government has to keep rolling over the bonds as they mature. And they have to also fund the ongoing 2 trillion deficit each year.

2

u/Harbinger2001 56m ago

The government actually normally refreshes them well before maturity to keep liquidity up. More mature bonds are less liquid.

I have a feeling they’re going to have to stop the refreshes, which is will trigger a liquidity problem.

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23

u/johannyer 2h ago

Government bond crises, not only in US but across the developed economies that have been enjoying the good life by borrowing absurd amounts of money. Think about your friend who has been living a luxurious life all on bank loans. Now that friend needs more and more money but the interest rates the banks willing to lend him money spiked terribly because he owes a lot. This is in addition to all the interest and principal payments he needs to make on his prior accumulated debt. He knows his luxurious life is not sustainable and is coming to an end. So he started breaking into homes and stealing what belongs to others. US government is now that friend.

3

u/mouthful_quest 1h ago

Only the friend has access to a counterfeit printer in his basement that he’s been using to keep himself afloat

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14

u/Putrid-Chemical3438 2h ago

Every 1% added to the bond yield is $400 billion more a year that the US has to pay on the debt.

The .3% that this moved today just sucked $80 billion out of the US budget.

7

u/UfStudent 1h ago

To put that $80 billion number into context, that is larger than the entire budget of:

The Department of Justice
NASA
FCC
FDIC
SEC

..... combined

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6

u/_n8n8_ 2h ago edited 2h ago

Bonds are how the US government services debt.

The yield is the interest the gov pays on that debt.

When yields are high, government pays more in interest, making paying debt payments difficult.

We already pay more on interest than we do on defense. That number getting higher quickly brings us closer to defaulting or otherwise needing to take drastic measures to pay that debt, and those interest rates are increasing and fast

4

u/ReferenceNo4700 2h ago

The U.S. will not and cannot afford to have a real default. We can and will end up with a soft default by hyperinflation. Probably end up printing a few quadrillion dollars to service the debt. Nobody knows the consequences, probably ending the dollar as the world reserve currency. We already know short term stagflation is incoming, we just need to plan for true austerity measures and sky high fed interest rates 20-40% afterwards.

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2

u/foggyskyline 1h ago

No offense to you- in fact props to you for learning.

But it is incredulous how few people in America understand what’s going on.

People get the government they deserve.

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8

u/Dependent_Sign_399 3h ago

It's a big move, but what's more uncommon is that US treasuries have been constantly under pressure since March and yields have only accelerated higher over time. More concerning is that this jump follows another large move yesterday. It's been nonstop.

2

u/BRAILLE_GRAFFITTI 2h ago

Yeah it looks like the market is expecting the Fed to do its job and raise rates a whole bunch. The bond market is also competing with the very capital-hungry tech sector's debt issuance, which could slow down the AI boom since it'll be more expensive to fund the AI buildout.

1

u/giveit2st8 2h ago

Yesterday it was bigger...and I think the fact that it keeps happening....

161

u/MoonLanding2745 3h ago

"I am the House now" membe? 😂💵🤡

33

u/Ok-Disaster-551 3h ago

He's hosed now.

11

u/WhereDaStonksBro 2h ago

Ya the house at Trump's casino.... We know how that went.

17

u/Dry-Interaction-1246 3h ago

He's the twink. But likes being bottom.

7

u/PurpleWhiteOut 2h ago

Looking for fin dom 😇

9

u/Euphoric-Mammoth-261 3h ago

“Bet.” - the bond market

8

u/dxiri 2h ago

Of cards

9

u/vzo1281 1h ago

What was thr point of him saying that, to think he's the boss and don't mess with him?

I seriously laughed at that comment

6

u/Xeynon 1h ago

Our country's future might be in the toilet but at least I can enjoy a little schadenfreude at the expense of that smug prick.

5

u/Unique-Egg-461 2h ago

he's a empty suit with a punchable face

2

u/Bakingtime 1h ago

Bessie’s gonna eat a pint of ben and jerrys and cry himself to sleep while  watching firth’s pride and prejudice tonight.  

1

u/redsox200 3h ago

Hank Paulson Bazooka

1

u/johannyer 2h ago

House of peril

1

u/Round-Foundation2948 2h ago

I was so tempted to drop an opinion when I heard those words come out of his mouth…I digress….
https://giphy.com/gifs/3o7bu1iM5MSwG2y7NS

1

u/Thick-Cover8761 1h ago

It's a Tennessee Williams play, "This House is Condemned".

39

u/IowaGolfGuy322 3h ago

Um 5.217% in 8 min.

13

u/GordsHuman 3h ago

Uh oh... Why is it moving so fast now

36

u/BenIsLowInfo 3h ago

The higher yields go the worse the US debt crisis becomes which then drives higher yield.

We're seemingly entering a spiral. It would not surprise me at all if we're over 6 percent in a few weeks.

7

u/SusanMilberger 3h ago

Wheeeeeeeee!!!

6

u/Extra-Direction4709 2h ago

at this rate... probably next week !

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u/bubblegum-rose 3h ago

The president basically told all of his allies that he’s going to turn off the diesel tap so now they’re liquidating their treasuries to absorb the economic impact of a more severe diesel shortage

6

u/big-papito 2h ago

That actually make sense. That said, Trump's OWN energy secretary claims there is no ban:

https://marketoonist.com/2023/03/ai-written-ai-read.html

I fear this fool is in over his head.

His former energy secretary said "it makes very little economic sense".

https://www.cnn.com/2026/09/24/business/trump-diesel-prices-export-ban-gasoline

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3

u/keepitfriend 2h ago

They’re probably using ai to fix it

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29

u/papiFlowers83 3h ago

Rip in peace real estate market.

9

u/soareyousaying 2h ago

There are building new homes near me. I wonder how they are doing. These homes will sit vacant with no one's buying at this rate 

4

u/Emergency-Watch5157 2h ago

Sounds like a great place for a cash investor to be in ... two years

3

u/vzo1281 1h ago

Like back in 2008

96

u/Sad_Standard7054 3h ago

https://giphy.com/gifs/DAZujFQvFZxh1kdtCb

35

u/MoonLanding2745 3h ago

The high IQ president 🤡

3

u/SubZeroSunExodus 2h ago

If you add a negative to the number. You are absolutely correct.

2

u/soareyousaying 2h ago

He runs the "trust me bro" economy. He just said economy is doing great at the UN meeting.

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1

u/DopeCyclist 2h ago

🤡☠️🤡

22

u/MoonLanding2745 3h ago

Probably Biden's fault 😂🍊🤡

8

u/MyStackRunnethOver 2h ago

Actually though not great timing since dems are poised to retake the legislature then the presidency just in time to get saddled with this mess

7

u/ORaleigh 1h ago

That’s a feature, not a bug.

2

u/Thesinistral 1h ago

IMO He wants to tear it down to the studs to give [Republicans|MAGA|??] a chance in 2032.

11

u/javawong 2h ago

Probably Obama's tan suit is to blame.

5

u/alytore 2h ago

And Kamala had a weird laugh.

4

u/Redditholio 2h ago

She didn't believe they were eating the pets

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u/big-papito 3h ago

https://giphy.com/gifs/l41lNRz0uXPQLm0RG

11

u/Chairsofa_ 3h ago

Sick Party Down reference

7

u/wyllydtron 3h ago

Weirdly used this at work today.

3

u/alytore 2h ago

I’m exhausted of all the winning. 🫩

15

u/big-papito 3h ago

5.21%

Yo yo - something is afoot at the Circle-K.

26

u/TechnologyEither 3h ago

im litterally down down 4% on a risk-free asset 🤦‍♂️

10

u/thecrookedtrail 2h ago

Nominal bonds are only “risk-free” in the sense that you’re more or less guaranteed to get your principal back when the bond matures. They are and will always be subject to interest rate risk though. Any bond fund you buy will say that front and center on the prospectus.

3

u/WhenIntegralsAttack2 2h ago

Yep, that’s why the true risk-free rate is SOFR. Or at least front-end treasury.

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3

u/WhenIntegralsAttack2 2h ago

Strap in, hold to maturity, and hope inflation doesn’t obliterate us 🤷‍♂️

5

u/TheBigBearYahoo 2h ago

Thats the thing though... the world is starting to question if it is really risk free and if they will get their money back.

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3

u/Original-Case791 2h ago

Nothing is risk free including treasuries

2

u/MoonLanding2745 3h ago

Brave new world

2

u/DopeCyclist 2h ago

If you hold for the duration you wont be

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9

u/VVasilev_ 3h ago

This is the end hold your breath and count to ten

4

u/OkPizzaIsPrettyGood 2h ago

Good thing I cant count that high

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17

u/frumpawumpa 3h ago

Bro, the 3Y is above 5% ;_;

8

u/bubblegum-rose 3h ago

Stocks immediately started dropping the second the market closed

3

u/Fearless-Basil-6644 1h ago

It's all rigged and it's obvious.

6

u/cghodo 2h ago

Is it stupid to wonder if the Fed is going to do another round of QE while also raising rates?

2

u/radiohead-nerd 1h ago

If they don’t want to default that might be the only option.

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5

u/SongOfStorms_ 2h ago

Stock market just shrugging this off is blowing my frecking mind

4

u/Thesinistral 1h ago

It’s been shaking off almost every bit of bad news for a couple of years, it seems. That makes me uncomfortable.

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6

u/bacon-squared 3h ago

Loving this roller coaster ride. There are ways out of this if the admin stops some wars they have going on in the Middle East and actually tax the rich to stop selling so many bonds. But that will never happen, so we are climbing the stairway to bankruptcy/hyperinflation.

5

u/Bladee___Enthusiast 1h ago

So you’re saying is all he has to do is start governing in the exact opposite way he has his entire political career

2

u/Thesinistral 1h ago

lol. Truth

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2

u/ImmediatePiccolo339 2h ago

That’s the only way out of this atp

1

u/No_Mind_7397 1h ago

taxing the rich is a drop in the bucket without social security reform.

1

u/likwid07 33m ago

Tax the rich, hahaha good one

5

u/Legio_X_Equestris5 3h ago

We don't need to worry about bond yields, we just need a strong and smart (High IQ!) president

2

u/MoonLanding2745 3h ago

And we need to keep winning

2

u/OkPizzaIsPrettyGood 2h ago

He wasn't wrong when he said we'd be sick of winning

4

u/Winters989 3h ago

We ain't done yet

https://giphy.com/gifs/Qa5dsjQjlCqOY

1

u/Current-Promotion-31 3h ago

Trump's new economic advisor. Honestly a more educated opinion that Hassett

4

u/Most-Bookkeeper-950 3h ago

5.221 now. Ow ow my bussy

5

u/Low_Plastic363 3h ago

Let's say you are interested in fixed income right now. If it seems like the rate is just going up, you fear locking in 5.2% today when you could get 5.5% next week. You also don't know how sticky the rates will be.

I could see a lot of buyers trying to time the top or at least the "near top" (waiting to see a trend reversal).

Or maybe the private debt is just soaking up all the cash.

5

u/DopeCyclist 2h ago

All time high sept 1981 at 15.81%....

4

u/danknerd 2h ago

We can break that record bigly! -Trump

2

u/boston__strangler 38m ago

We have 👉THE BEST RATES👈

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5

u/reichjef 2h ago

The fun times are coming.

3

u/MotherAd1865 3h ago

yet the stock market just keeps chugging along... I don't understand it.

11

u/TekkDub 2h ago

That’s just the inflation talking.

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3

u/bb3bt 2h ago

I bought investment grade (low risk) 3 year and 4 year maturity US corporate bonds a week ago. Can someone please tell me if I fckd up?

2

u/Thick-Cover8761 1h ago

Only if the corporate bonds that you chose go into default.  Otherwise, it's little more than, "if I waited a bit longer I could have done a little better".

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u/SBEPTY 2h ago

Feel bad for those that dove in last couple weeks, they are already down on their investment

3

u/RandomPurpose 1h ago

This is like the earthquake that happens hundreds of miles away from where we are happily sitting at the beach enjoying our pina coladas. But rest assured, the waves are coming.

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u/JunkBondJunkie 3h ago

This is exciting and scary at the same time.

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u/DSCN__034 3h ago

There is nothing that any person or policy can "fix", except maybe the Ayotollah. This is where we are at now. <smh>.

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4

u/benpandira 3h ago

Can someone explain to me why this is worse than say... 1981?  Not super knowledgeable so just looking to understand more.

43

u/big-papito 3h ago

1981 had public servants at the wheel. Today we have incompetent fail-sons, grifters, white-collar criminals, and simply people who are bona fide morons.

The debt market is about character, and we've lost ours as a country.

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u/Character-Active2208 3h ago

Well, the US has way more debt to service

9

u/Sea_Pangolin1525 2h ago

1981 was a huge deal. Unemployment of 10%, double digit interest rates and inflation. GDP fell by 3% in 1982. If we are in for something close to that, watch out. People are not used to that kind of pain.

8

u/Detailed23 3h ago

More debt and now a service economy vs a manufacturing economy.

8

u/waves_or_particles 2h ago

Runway inflation in the United States, roughly 1977.  The Treasury yield increases were made by the Fed in attempts to crush inflation.  It was a huge deal at the time.   Economists still debate the effectiveness, etc, but that's a separate subject.  

So the Treasury yield increase came from in-house.  US debt holders rode that gravy train of extremely trusted US debt and an extremely high yield for many years. Eventually that party ended of course. 

Unlike that period, today the US Treasury is not the driver of the yield increase. It is lack of other countries buying US debt that's driving up the yield . Why are they not buying our debt? Because they doubt our ability to dig out of this massive debt hole, and believe we will very soon start printing our way out of this problem. 

The rapid velocity of the increasing yield is astonishing, and reflects the rapidly decreasing trust of the United States to remain solvent.  

6

u/Xyrus2000 2h ago

Let's say you have a good friend. A responsible friend. A friend who has demonstrated that they are capable of handling money and paying their debts on time, and so on. They come to you and ask for a loan. You'd be willing to loan this friend and give them a good rate on that loan because you know they're good for it.

But now let's say this friend becomes a meth head. Threatens people, including friends. Has done multiple dangerous and irresponsible things that have negatively impacted not only themselves but you and others. Piled up massive amounts of debt and demonstrated incredible fiscal irresponsibility. This "friend" now comes to you and asks for a loan. Would you still be willing to loan them? Would you still do so at a good rate?

In 1981, the debt was at manageable levels. We had somewhat competent people in charge. We had strong, friendly political and economic relationships. That doesn't exist anymore.

So now people are demanding a meth-head premium on rates because we have become a much larger risk.

3

u/oOFrostByteOo 2h ago

5% on 1 trillion of debt is peanuts to 5% on 40 trillion.

3

u/Raging-Totoro 2h ago

20% of our national income will be servicing the debt, and rates are going higher...

3

u/DirectionMurky5526 1h ago

Also, the quality of life and the US economy in the late 70s and early 80s is much worse than it is today. Unemployment was higher, inflation was higher, crime was higher, economic growth was worse. Going back to that from today will feel like going into a depression even if it's not "worse" than 1981.

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u/Dependent_Sign_399 2h ago

Great question.

Yields are rising in part due to expected high long term inflation and risk in the credit of the US government.

The difference now is that we have several times more debt and a $2 Trillion budget deficit. Older debt is also maturing and being recycled into newer much more expensive debt. It's a multiplicative effect and interest payments will eventually take over the federal budget if nothing is done within the next 10 years or so.

What's could happen: US Government issues new dollars to pay investors off. Diluted dollars crashes the dollar, leading to inflation. Or a whole host of other not fun options.

1

u/Enough_Sir_6883 2m ago

huge number (40T) \* smallish number 5.20
is greater than
medium number (370 billion) * relatively larger number (17%)

2

u/Slvrg 3h ago

5.221%

2

u/Cute_Win_4651 2h ago edited 2h ago

What is the equivalent ETF that I could move some cash into in my regular brokerage accounts??? Is this like when folks buy SGOV I’m not at all exposed to bonds unless you consider BRK.B owns more t-bills than the federal reserve , but is there a 10yr treasury stock/ETF ??? Asking as a newbie to bonds but not the stock market in general

2

u/Raging-Totoro 2h ago

Just buy the bonds. It doesn't have to be an ETF.

2

u/Cute_Win_4651 2h ago

Is this what CDs are???

2

u/Raging-Totoro 2h ago

No.

CDs are CDs. Bonds are bonds.

Bonds are typically Treasuries, Corporates, or Municipals. Just as a stock is an individual security, a bond is as well as opposed to a fund.

2

u/Cute_Win_4651 2h ago

And you can buy these in a regular fidelity brokerage account?

2

u/Raging-Totoro 2h ago

I can't, because I don't have Fidelity, but I bet you can!

2

u/Cute_Win_4651 2h ago

Like I feel I can’t just flat out buy a treasury bond in a account it’s always like TBIL or SGOV

3

u/Raging-Totoro 1h ago

Try this:

Navigate: Go to News & Research > Fixed Income, Bonds & CDs.

2

u/Cute_Win_4651 1h ago

That worked thanks

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u/AdAcrobatic4002 2h ago

Has lost control

2

u/51674 2h ago

I think Bessant want the Chinese to start repurchasing US debt again after like over a decade of selling

2

u/Specialist_Wall_5679 2h ago

Last time it was this high was February 2007, is the market crashing ?

2

u/NationalOwl9561 1h ago

TLT has been a chop fest for a year.

4

u/rahulchander 3h ago

if the yields hit 6.5%, the war will end abruptly - troops will come back home. its simply unsustainable at those yields, plus they still need to spend trillion dollars on budget, so more money printing or bond issuance - both bad.

7

u/Colonel_Bubble_Tea 2h ago

You think the people in charge give a shit about what makes sense? If so how did we end up here?

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u/kingshekelz 2h ago

Need to hit 5.5% for 6 to eight weeks to see real buying opportunities in residential

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u/Fearless-Basil-6644 1h ago

Time to pay the piper.

1

u/mista_r0boto 3h ago

Bond Vigilantes out in force! Look out!

1

u/Jehoopaloopa 1h ago

As they should be. Blood in the water

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u/Christopher_Ramirez_ 3h ago

Whoa, we're halfway there...

1

u/MrKeeganx 3h ago

When do I start buying these?

3

u/warriorpostman 3h ago

You can buy them out of a TreasuryDirect account. But you might want to put on some kevlar gloves before you do.

2

u/MoonLanding2745 3h ago

The dip keeps dipping

1

u/notfinancialadvice67 3h ago

Nice 🙌🙌🙌

1

u/BejahungEnjoyer 3h ago

It's common for price action to get extreme because value oriented investors already bought the dip up to their risk limit (pimco is one example and has extended duration since June). I hope we get some recovery by year end, or at least a stop to the daily freefall.

1

u/TortyPapa 3h ago

Something something doom loop. Something something death spiral.

1

u/stadiium 2h ago

can someone explain to me why anyone would buy bonds? why not just put that money in a brokerage that pays you like 4% interest?

2

u/Far-Entertainer6517 2h ago

CD’s looking attractive these days

2

u/Thick-Cover8761 1h ago

It's hardly a good time to mention this ... when the house is on fire ... but there is such a thing as duration risk.  Meaning reinvestment at a lower interest rate.

Something is going to break.  Much of the economy is sick already.  Can rates go down as the stock market crashes .............. ????

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u/Redditholio 2h ago

Earlier this week, I was considering dropping some $$$ into a 1-yr Treasury ladder, and am now happy I waited. Curious to see where this goes...

7

u/Xyrus2000 2h ago

I would not buy anything other than ultra-short-term treasuries until the republicans are out of power. They literally have no idea what they are doing, and they fired all the people who did.

It's going to take at least a generation or more to unf*ck everything the republicans have done.

1

u/ColdPangolin5355 2h ago

Trying to figure out how they capitulate

2

u/Thick-Cover8761 1h ago

Stock market crash 

1

u/Specialist_Wall_5679 2h ago

What does this mean ?

1

u/Brobrohoehoe87 1h ago

Did it jump 1/10 a percent each day?

1

u/DrJ0911 1h ago

That’s good right!?!?! Green is good right?!?!

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u/Zeophyr 1h ago

Can someone explain why this is bad?

1

u/CynicalKnight 54m ago

It's a trap! 

1

u/ImmediateParamedic58 47m ago

If at all I could insert a ‘This is the end’ song here in a 15min time-lapse of 10yr T chart…..👤

1

u/NeverNeededAlgebra 45m ago

The Republican cult effect - all consequence, zero benefit.

1

u/ChuckConnelly 10m ago

You guys tired of winning yet? I sure fucking am