Reading the Crystal Ball of Bonds

From Marketplace.

I'm Sabri Benachore, Infredated Brunk Hatchew.

Alright, we are going to spend some time this morning in the often-confusing world of

bonds.

The yield on the 10-year treasury note that's the return you get from investing in one

has hit a milestone, rising to levels not seen since 2007.

Now, 10-year treasuries have a life of 10 years, so the yield on them has to account

for what the economy is going to be like for the next 10 years.

The yield is determined by the market, like the price of eggs, so if the yield is rising,

it means the market, the people who are buying and selling these things, are imagining a 10-year

future where interest rates in general in the economy are going to be higher for longer

than they thought.

So the market is basically demanding that bonds keep up, otherwise with the point of investing

in them.

Marketplace's Nova Sappho is here with more.

Hi Nova.

Good morning.

So if the last time bond yields were this high was in 2007 on the eve of the Great Recession,

should we be worried right now?

Well it's certainly something to pay attention to, and it's a bit paradoxical actually.

It is a thicket like you described in the lead, because by mid-2007 last time, the Fed

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