voa economic report - What's Up in the Bond Market?

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is the VOA Special English Economics Report.

Bonds have in the news a lot in the last few . Yields on the ten-year United States Treasury note jumped their highest level in five years, before easing.

are debt owed by a government or a company. holder of a bond is paid interest until the when the bond matures. Then the amount of the , its face value, is paid back.

Investors can a new bond and keep it until it matures. they can buy and sell existing bonds. The return a bond is called the yield. Yields and prices existing bonds can change as investors trade them.

fall when investors seek the security of bonds and willing to pay higher prices. Yields increase as prices .

This month, yields on the ten-year Treasury note above five percent for the first time in close a year. Higher yields raise the cost for individuals businesses to borrow money at interest rates that are to the ten-year note.

Rising yields can also stock prices. When yields rise, investors often sell stocks order to buy bonds. If investors can get high holding low-risk bonds, or simply keeping money in the , they will do it. Yet holding bonds can also risks as values for new and existing bonds change the market.

Bond prices can also drop on signs inflation. But inflation does not seem to be a with the current softness in the American housing market. housing starts fell more than two percent in May.

experts believe the United States central bank will keep rates unchanged when policy makers meet next week. But investors are concerned about pressure for higher interest rates Europe and Asia.

Another influence on the bond market the willingness of foreign countries to buy United States debt. In Asia there have been signs that some that hold a lot of low-yield debt want greater on their investments. China, for example, recently announced it invest three billion dollars in the Blackstone Group, the company in New York.

For much of the year, bond yields have been inverted. Short-term debt returned rates than long-term debt. In the past, an inverted curve was thought to signal a possible recession. Now are back to what is considered "normal" with long-term paying higher yields.

And that's the VOA Special English Report, written by Mario Ritter. I'm Steve Ember.

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