Bonds 101: What you need to know about the bond market

MarketsBonds 101: What you need to know about the bond market Moves in the bond market can have huge impacts on consumer finances — affecting how much you pay for everything from mortgages to car loans. The New York Stock Exchange on April 8. Charly Triballeau / AFP via Getty Images fileShareAdd NBC News to GoogleMay 20, 2026, 6:00 AM EDTBy Kayla Steinberg and Allie CanalThe stock market is near record highs, but there’s another corner of Wall Street that’s flashing warning signs: the bond market.Subscribe to read this story ad-free Get unlimited access to ad-free articles and exclusive content.For many people, talk of bonds and yields and rates might sound like alphabet soup. But the bond market actually has a huge impact on your life — affecting how much you pay for everything from mortgages to car loans. Bond ... James Bond?No, not James — but still action-packed.A bond is basically an IOU. Investors lend money to institutions — often the U.S. government — in exchange for interest payments over time.U.S. government bonds are called Treasurys, and they come in different durations: one month, two months, all the way up to 30 years. Lending money to the government tends to be a sure bet: It’s much less volatile than the stock market, and you’re all but guaranteed you will be paid back. As an investment, bonds can be a safe haven during times of uncertainty.And you get regular payments back — what’s called a yield. When lots of investors sell bonds, yields typically rise, because there are fewer people overall in the bond market. Yields also tend to rise when the Federal Reserve hikes interest rates, and they fall when those rates come down — often in response to inflation. Let’s say you buy a 10-year bond for $100 at a 5% yield. But then, after a few years, overall interest rates go up, and yields on new bonds are 7%. Your 5% bond is less desirable, because it has a lower yield than what’s being offered new. If you wanted to sell it, you wouldn’t be able to sell it...