Why everyone is suddenly so interested in US bond markets

April 19th, 2025, BBC

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Stock markets around the world have been relatively settled this week after a period of chaos, sparked by US trade tariffs.

But investors are still closely watching a part of the market which rarely moves dramatically - the US bond market.

Governments sell bonds - essentially an IOU - to raise money for public spending and in return they pay interest.

Recently, in an extremely rare move the rate the US government had to pay on its bonds rose sharply, while the price of bonds themselves fell.

The volatility suggests investors were losing confidence in the world's biggest economy.

You may think it's too esoteric to bother you, but here's why it matters and how it may change President Trump's mind on tariffs.

What is a government bond?

When a government wants to borrow money, it usually does so by selling bonds - known as "Treasuries" in the US - to investors on financial markets.

Such payments are made over a number of pre-agreed years before a full and final payment is made when the bond "matures" - in other words, expires.

Investors who buy bonds are mainly made up of financial institutions, ranging from pension funds to central banks like the Bank of England.

How are they traded?

Bonds can be bought and sold like shares on a secondary market – an exchange – but, unlike shares, they offer guaranteed annual returns. The bond market is the world’s biggest securities exchange, worth almost $130tn (£99tn), with the US market accounting for about 40% of debt worldwide.

Government bonds are usually sold to financial institutions in auctions, and can then be resold on the secondary market for more or less than their face value.

外刊精读271期：新一轮美债危机山雨欲来？(选自BBC)

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外刊精读271期：新一轮美债危机山雨欲来？(选自BBC)