[ELI5] what does the yield on the US bonds mean exactly and why is it a concern when they rise?
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The “yield” is basically the interest that bonds pay…you loan money to the government (if it’s a US bond) and they pay you back with interest. The “yield” is how much you’re going to make from the bond.
When it rises, it means two things:
1) It’s costing the US government more to borrow money. Since a not insignificant amount of taxes goes to pay interest on debt the US already has, rising bond yields means the US government’s debt is more expensive, so they’ll have to pay more for interest in the future, so they’ll have less left to do other stuff.
2) Bonds are in higher demand than they were before. That usually happens when people want to take their money *out* of somewhere else and stick it somewhere safe (bonds are very safe investments). So rising bond yields is a sign that people aren’t very confident that other investments are going to do well…like stocks…so it’s a sign of a weakening stock market.
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