Government debt costs jumped Wednesday. Multiple factors caused it. The headline doesn't say which factors. Doesn't matter. Treasury yields went up and someone decided this required an urgent explainer about what happens to the economy.
Nothing happens to the economy. The economy was already happening. It continues to happen. Yields go up, yields go down. Bonds get more expensive to issue. The government pays more interest. Contractors still get paid. Social Security checks still clear. Your neighbor still thinks his pickup truck is an investment.
Retail traders saw the headline and immediately opened their brokerage apps to panic-sell something they don't understand. They bought TLT six months ago because a guy on Reddit said rates would drop. Rates went up instead. Now they're searching "inverse bond ETF" at 9:47 PM on a Wednesday, sweating through a Patagonia vest their wife bought them for Christmas.
The article promises to explain what happens when yields soar like they are now. Like they are now. As if this specific Wednesday represents some unprecedented moment in financial history. As if Treasury yields have never moved before. As if the economy wasn't already pricing this in three months ago while everyone was busy asking ChatGPT to explain the yield curve.
Here's what actually happens: bond prices fall, mortgage rates might tick up, some pension fund manager sends a slightly tense email, and CNBC books the same seven people to say the same twelve things they said last time. The economy shrugs. Moves on. Forgets this happened by Friday.
The real story is that financial media needed content on a slow Wednesday and Treasury yields gave them an excuse to write the same article they wrote in 2018, 2013, and 2007. They'll write it again next year. You'll read it again next year. Nothing will happen then either.
Photo by Markus Spiske on Unsplash
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