Reddit! Help an investing idiot make sense of bombs, I've been trying on my own for months. Basically, I can't wrap my noggin around the whole world is interest thing.... Obviously a hot topic right now.
Basically, what I THINK happens is the yield goes up, which means those bonds will pay the bearer more. However, for some reason (I'd be interested in hearing why) the fed can't actually let bonds be too good of an investment, so when the bond yield goes up, they attempt to balance that out by raising the interest rates, which makes it 'more expensive to borrow' whatever that means.....
Like, if the yield is going up, isn't it already 'more expensive to borrow'? Since when I buy a bond they're borrowing my money, and when the yield goes in they pay more and I make more, right?
So is it the interest rate increasing that effects this, or not?
Also, is this good or bad for bonds? I know that's stupid, but seriously, if the yield goes up my bonds should pay me more, but then if the fed raises the interest in response, THAT makes the bonds worth less? But if one is done in response to the other, why wouldn't they just balance, and it would be a net nothing?
Is what's happening right now good for bond buyers or bad?
Submitted October 06, 2018 at 04:25AM by z4ck-z https://ift.tt/2E1EJ6s
