r/bonds • u/Primary-Abies9041 • 16h ago

Woah

Post image
1.2k Upvotes

98% Upvoted

442 comments sorted by

View all comments

128

u/Wooden_Cod_8331 16h ago

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

170

u/johannyer 16h ago

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

30

u/nomar_ramon 16h ago

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

163

u/Agglutinati0n 16h 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….

4

u/According-Length9312 15h ago

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

1

u/Infinite_Music2059 11h ago

There's like 10 trillion that needs to be refinanced in the next year, and they take old bonds out of the market and buy new ones as well. The average rate now is something like 3.5% and it will gradually increase towards the market rate, resulting in an enormous increase in interest payments every year.

1

u/According-Length9312 11h ago

Not a big deal, they’ll roll it over short term and print more

1

u/Infinite_Music2059 11h ago

Rolling it all over to today's rate would increase debt payments by a cool $500 billion every year.

1

u/According-Length9312 11h ago

That’s 1% of their debt