Treasury Yield Rate Explained & How the Fed "Prints Money"

Like, Comment, and Share my videos! 🔔 SUBSCRIBE HERE 🔔 http://bit.ly/BroeSubscribe Become a channel member to get access to great perks: 🌟 🎓 👑    / @jakebroe   💯 LET’S CONNECT 💯 📷 Instagram @JakeBroe 👉   / jakebroe   🐦 Twitter @Broe_Jake 👉   / broe_jake   👇 👇 Watch My Other Videos Here 👇 👇 ★ How to Buy Government Securities - Bills, Notes, Bonds    • How to Buy Government Securities - Bills, ...   ★ Why People Lose Money in Stocks (The Story of Mr Market)    • Why People Lose Money in Stocks (The Story...   ★ This is WHY is the Stock Market Keeps Going Up    • This is WHY is the Stock Market Keeps Goin...   ================ The Federal Reserve just pledged asset purchases with no limit to support markets https://www.cnbc.com/2020/03/23/fed-a... Fed surprises market with program to support corporate bonds amid coronavirus pandemic https://www.cnbc.com/2020/03/23/fed-s... What Is the Treasury Yield? Treasury yield is the return on investment, expressed as a percentage, on the U.S. government's debt obligations. Looked at another way, the Treasury yield is the effective interest rate that the U.S. government pays to borrow money for different lengths of time. Treasury yields don't just influence how much the government pays to borrow and how much investors earn by buying government bonds. They also influence the interest rates that individuals and businesses pay to borrow money to buy real estate, vehicles, and equipment. Treasury yields also tell us how investors feel about the economy. The higher the yields on long-term U.S. Treasuries, the more confidence investors have in the economic outlook. But high long-term yields can also be a signal of rising inflation in the future. The Fed's Tools for Influencing the Economy Manipulating Interest Rates The first tool used by the Fed, as well as central banks around the world, is the manipulation of short-term interest rates. Put simply, this practice involves raising/lowering interest rates to slow/spur economic activity and control inflation. The mechanics are relatively simple. By lowering interest rates, it becomes cheaper to borrow money and less lucrative to save, encouraging individuals and corporations to spend. So, as interest rates are lowered, savings decline, more money is borrowed, and more money is spent. Moreover, as borrowing increases, the total supply of money in the economy increases. So the end result of lowering interest rates is fewer savings, more money supply, more spending, and higher overall economic activity – a good side effect. Open Market Operations The other major tool available to the Fed is open market operations (OMO), which involves the Fed buying or selling Treasury bonds in the open market. This practice is akin to directly manipulating interest rates in that OMO can increase or decrease the total supply of money and also affect interest rates. Again, the logic of this process is rather simple. If the Fed buys bonds in the open market, it increases the money supply in the economy by swapping out bonds in exchange for cash to the general public. Conversely, if the Fed sells bonds, it decreases the money supply by removing cash from the economy in exchange for bonds. Therefore, OMO has a direct effect on money supply. OMO also affects interest rates because if the Fed buys bonds, prices are pushed higher and interest rates decrease; if the Fed sells bonds, it pushes prices down and rates increase. ================ #YieldRate #TreasuryBonds #TheFed ================ DISCLAIMER: This video is for entertainment purposes only. I am not a legal or financial expert or have any authority to give legal or financial advice. While all the information in this video is believed to be accurate at the time of its recording, realize this channel and its author makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in this video. ADVERTISER DISCLOSURE: Jake is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to www.amazon.com. Additionally, other referral links are included and this channel does receive compensation for sending traffic to partner sites. Shopping through our links is an easy way to support the channel and we appreciate and are super grateful for your support!