The collapse in Treasury bonds now ranks among worst market crashes in history
I always have a hard time keeping track of what goes up and what goes down with bonds, so writing this down mostly for myself:<p>The Treasury sells bonds with a fixed amount. People bid on them. The higher the bid, the lower the effective interest rate. (In between Treasury sales, there&#x27;s an open market of people selling their bonds to each other, which hints at what the Treasury will pay next time.)<p>So a price crash means that the bonds are cheaper, which means that the Fed will get less money when they sell the bonds. It means that interest rates are higher, costing the Federal government more money for the same amount of debt.<p>The Federal Reserve has its own interest rate, which in turn sets the rates that other banks will require for loans. They set that high when inflation is high, which encourages selling Treasury bonds in favor of other things. Inflation had been cooling but is still above target, and for the last few months the cooling had stopped.<p>It doesn&#x27;t help that the US government has had to sell a lot of its bonds lately, i.e. the debt is going up quickly. That too is tied to things like inflation, as well as the war in Ukraine.<p>So... higher prices on stuff lead to a sell-off of bonds, raising interest rates. OK, I think I understand all that.