18. Understand The Yield Curve, Treasury Bonds, and Stock Market Impacts

Today we're talking bonds, Treasury Bonds, that is. 🍸 Along with yields, impacts on the market, and how the US always pays its debts 🦁😏

🤨 What exactly is the yield curve and what does an inverted yield curve mean?

We're going to learn how to use this as a scrying tool to predict the future in terms of interest rate changes and economic activity. Let's demystify the fixed-income security market (did you know there is not just a stock market, but also a bond market?) and learn about the US department of the treasury and how they issue debt.

🔮Yield Curve Crystal Ball 🔮

Normal Yield Curve = great, economy expected to grow over time

Steepening Yield Curve = might mean inflation is high, short-run good for stocks, but see what the Fed does

Inverted Yield Curve = Not always, but can indicate a recession

*See GDP and Economic Data for the scrying results*

💰 Should We Buy US Treasury Bonds, Notes or Bills Now?

FYI: Bonds = Long-term; Notes = Medium amount of time; Bills = Short-term

Having a portion of your portfolio that is risk-free (i.e. bonds) helps to have you a more diversified portfolio.

As of Nov. 9, 2023:

• 2-Yr T-Note Yield: 5.037% (this is prettttty good for a short-term if you wanted to look into these - not advice, we are not financial advisors as a disclaimer)
• 5-Yr T-Note Yield: 4.654%
• 10-Yr T-Note Yield: 4.640%
• 30-Yr T-Bond Yield: 4.782%

💸 How do you buy US Treasurys?

Go to your screener tool (we taught you about screeners in Ep. 08) and select "category: fixed income or treasurys" and you buy them in an ETF.

🧠 FYI, treasurys is the plural when we're talking about US treasury securities to differentiate from "treasuries" as in an institution like the Treasury Department 🧠

🧐 Who is "The Treasury" and What Do They Do?

They are the finance department of the US government. They issue the debt.

⚡️ What does this have to do with the stock market rally?

The treasury announced the issuance of debt funding, and it was a slower pace of supply than the last quarter. And in the last quarter it was a ridiculous amount. This gave clarity to the bond market. Listen to the full episode to learn allll about it!

🙋🏽‍♀️🙋🏻‍♀️🙋Still Confused? Have More Questions or a Comment?🙋🏾‍♀️🙋🏼‍♀️🙋🏾

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Market MakeHer is an investing education podcast and LLC with a mission to demystify the stock market and make financial literacy accessible to all self-directed investors! We believe that investing is for everyone and that's why we break down complex investing topics (from "Her" perspective), show you free tools/resources on our podcast, and offer a ton of free educational content on our ⁠website⁠!

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