If more bond are being sold on market than being bought, the price drops and the interest rate of the bonds (yields) go up.

US treasury wants to borrow $100 to fund its new Israel War themed pencil sharpener. It offers a $100 Treasury Bond at that current yield of 5% (anyone who buys gets 5% back every year). Only once the bond is sold can the govt print more money.

China buys the bond and a few months later its real estate market crashes so China decides to sell at a loss for $95. The yields in the bond market go up to 5.27%.

Now if US wants to borrow money they need to borrow at a higher interest rate. Problem is they keep doing just that so theres a higher supply of bonds on the open market than being bought. This causes yields to go up out the ass.

This puts the banking system at risk because they hold Treasuries to cover the deposits, puts the futures commodity market at risk because they depend on a stable Treasury to trade, and of course the stock market because if businesses start losing on THE MOST STABLE AND LIQUID ASSET IN THE WORLD then they're going underwater and selling whatever else they have to cover their losses.

Basically fucks the entire US economy and the world.

And the primary reason is because the US govt keeps borrowing money. They have borrowed half a trillion in a little over 3 weeks.

If more bond are being sold on market than being bought, the price drops and the interest rate of the bonds (yields) go up.

US treasury wants to borrow $100 to fund its new Israel War themed pencil sharpener. It offers a $100 Treasury Bond at that current yield of 5% (anyone who buys gets 5% back every year). Only once the bond is sold can the govt print more money.

China buys the bond and a few months later its real estate market crashes so China decides to sell at a loss for $95. The yields in the bond market go up to 5.27%.

Now if US wants to borrow money they need to borrow at a higher interest rate. Problem is they keep doing just that so theres a higher supply of bonds on the open market than being bought. This causes yields to go up out the ass.

This puts the banking system at risk because they hold Treasuries to cover the deposits, puts the futures commodity market at risk because they depend on a stable Treasury to trade, and of course the stock market because if businesses start losing on THE MOST STABLE AND LIQUID ASSET IN THE WORLD then they're going underwater and selling whatever else they have to cover their losses.

Basically fucks the entire US economy and the world.

And ilthe primary reason is because the US govt keeps borrowing money. They have borrowed half a trillion in a little over 3 weeks.