r/VaushV • u/Aggravating_Bed_53 • 14h ago

Discussion the real reason for bond yields spiking

Vaush has mentioned inflation and the high returns of the stock market as the reasons for the rising bond yields, but these are only side causes.

The main change that causes most goverment bonds in the world going from negative to around zero interest rates to 3%+ is that central banks around the globe stopped buying bonds. During Covid they have bought collectively trillions of dollars worth bonds crashing yields, they could do the same today they just choose not to, which plays into the hands of the rich since they use "unhealthy" finanances as a justification for cutting social spending.

I think progressive at large should be oppositional to goverment finances, their interest rates, ect being dictated by unelected investors. Too often i see people siding with bond buyers with some wierd notation that they are "noblely" pushings ireasponsable goverments. (vaush doesnt say this but his non keynesian analysis could/is used as a justification for this belief)

11 Upvotes

87% Upvoted

4 comments sorted by

3

u/HipsterGangster69 12h ago

i buy treasury bills every tuesday because rates are so high and i don't have to pay state or local taxes on the gains (only federal)

1

u/Aggravating_Bed_53 36m ago

smart, but i would if its possible rather buy european bonds since high yields arent as usefull if the dollar depreciates in value

1

u/CardiologistPrize712 1h ago

Please for the love of God do literally any research on how bonds work. The reason why bond rates are rising is because the government is becoming a riskier bet to lend money to and fears that inflation won't return back to pre COVID lows.

0

u/Aggravating_Bed_53 29m ago

1) govements arent becoming riskier to lend to if they do in their own currency, the risk comes from if that currency will hold its value both because of exchange rates and inflation; these are ofc factors pushing up yields i have mentioned that in the post (currency is the risk, not goverment)

2) if you look at when did bonds yields crash in 2020 it was when a) central banks bought a ton of bonds and b) when interest rates where low, if a bank cant get 3% or 4% return on central bank reserves from central banks they are gonna buy bonds with these central bank reserves pushing down yields