美国30年期国债收益率飙升至2007年以来最高

As you probably already know, America's public finances aren't in great nick at the moment. The overall debt burden stands at over 100% of GDP, the deficit at about 6%, and neither look like they're going to get better anytime soon, especially if Trump gets his 1.5 trillion dollar defense budget. However, on Wednesday evening, things suddenly got a lot worse with the yield on 30-year bonds suddenly spiking to their highest level since 2007, just before the financial crisis.

So, in this video, we're going to explain what just happened and what it means for the US. We believe that we aren't defined by our attempts towards perfection, but by our courage to be honest when we fail. So, when we make mistakes, we have an entire policy designed around openly correcting them. Find out more about what we believe in our official manifesto. It's linked in the description of every one of our videos.

So, to understand this story, you need to know a little bit about how bond markets work. We've been through this before in previous videos, but for the benefit of new viewers, the TLDR is that when governments borrow money, they do it by issuing bonds. Bonds are essentially defined as three things: the face value, that's how much the bonds cost in the first place, the coupon, that is the annual interest rate that whoever owns the bond receives, and the maturity, that is when the bondholder is paid back the full face value of the bond.

To give an example, the US Treasury might issue a bond with a face value of $1,000, a coupon of 5%, and a maturity of 10 years. If you bought that bond off the Treasury, you would basically lend the US $1,000. The Treasury would pay you $50 a year for the next 10 years, and after 10 years, they'd return the whole $1,000. Importantly, however, the effective annual interest rate or yield of a bond can change if markets decide that they don't want to pay the face value.

So, for instance, if I tried to resell that bond that I just bought, but the markets are only willing to pay a face value of $900, whoever bought that bond would effectively be paid a higher yield. After all, $50 is more than 5% of $900. It's more like 5.5% and after 10 years, this new bond holder would also get an extra $100 because the Treasury would pay back the full $1,000 face value. But, this new bond holder only bought the bond for 900.

This means the effective yield would actually be over 6%. This would be bad news for the Treasury because it would imply that the US would now have to offer bonds with coupons over 6% to attract new buyers. This is essentially how governments decide what coupon to offer on new bonds. They look at the effective yield of already issued bonds and then offer effectively the same rate. Anyway, the key thing to understand for the purposes of this video is that in relatively safe bond markets, like those in the US, the yields on short-dated bonds generally track interest rates.

The basic idea here is pretty simple. Interest rates dictate