Why 5.25% is the Bond Market’s Tipping Point (Level 1)

Governments borrow money by selling bonds. Right now, bond markets are in trouble around the world. Yields, the interest rates governments pay, are going up. This means bond prices are falling. The sell-off started in the US. The stock market has been going up, helping the US economy. Usually, when stocks go up, bonds go down. Investors move money from one to the other. But history shows that if the yield on 10-year US government bonds goes above 5.25 percent, stocks and bonds start falling together. On Monday, the yield touched 5.24 percent, a 24-year high. Stocks and bonds both fell. Oil prices reached $108 a barrel because the war in Iran has no end. High oil prices can mean higher inflation and interest rates. Stocks are very important. They make up 33 percent of US household wealth, the highest ever. If stocks fall, people may spend less, hurting the economy and the government budget. This adds a new risk.