United States President Donald Trump’s tariffs have roiled financial markets globally.But while Trump’s trade salvoes have sent stock markets on a rollercoaster ride, it is the turmoil in the bond markets – specifically the fall of bonds in tandem with stocks – that has prompted the most concern among economists.
What are bonds?
Bonds are a type of investment that involves the buyer lending money to a government or corporation for a specified period.
In return for their investment, the buyer receives interest payments at a specified rate at regular intervals, in addition to the original investment sum upon the maturity of the bond at a predetermined date.
While typically providing lower returns than stocks, government bonds are widely considered among the most low-risk investment options.
Bonds issued by the US Treasury are especially favoured by investors as a safe haven asset since they have the backing of the world’s most powerful government and top economy.
Because of their reputation as a safe asset during periods of economic volatility, the prices of Treasuries – which are known as “bills”, “notes” or “bonds”, based on their maturity date – typically rise as the prices of stocks fall. Advertisement
The prices and yields of Treasury bonds move in opposite directions – the cheaper the bond, the higher the interest payment.
What has been happening in the bond market?
After Trump announced swe …
