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A flashing red light from the bond markets

US Treasury bond yields are up. What does that mean?

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As someone with a 401(k), I tend to prefer it when financial news doesn’t reference the 2008 financial crisis. Unfortunately, that was not to be on Tuesday: the US bond market is having a tough go of things right now, and the 30-year Treasury yield just hit a 19-year high last reached in June 2007. Other countries, including Japan, Germany, and France, also hit multi-year highs.

So what does that all mean? It sounds technical, but bond yields underlie the cost of borrowing for just about anything, from mortgages to car loans. Essentially, they’re the rate the government pays to borrow money on different time horizons (10-year Treasury notes or 30-year bonds, for example, often just called Treasuries). When investors sell government bonds, the price falls, and bond yields go up. A combination of weak demand and heavy supply right now means........

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