Over the past week, I’ve been researching bond trading after learning about a hedge fund that specializes in fixed-income strategies. In the process, I’ve found myself going down one finance rabbit hole after another—there’s a lot to learn about how interest rates, government policies, and investor sentiment all interact to shape the bond market.

One article that really caught my eye was a recent piece in The Wall Street Journal asking, “Is now the time to buy bonds?” What intrigued me was the focus on why we should pay close attention to the White House’s policies rather than just the Federal Reserve’s rate moves. It’s a perspective that’s especially relevant for anyone curious about where bond yields might be headed. Below is my best effort to distill the article’s key points into simple terms—both for my own clarity and for anyone else looking to learn more about the bond market.

The White House’s policies can significantly influence the bond market because government spending drives deficits, which in turn affects the supply of Treasury bonds. When the government spends more than it earns, it must borrow more by issuing new bonds, and if there’s a surge in these bonds hitting the market, the Treasury typically offers higher yields to attract buyers. Additionally, recent policies like tax cuts or increased spending can stoke inflation fears or increase the national debt, making investors wary and prompting them to demand even higher yields in compensation.

What Happens When Yields Go Up?

• Prices go down. Bond prices and yields move in opposite directions. If yields are rising, the value (“price”) of existing bonds tends to drop. That’s because new bonds are paying higher interest, so older bonds with lower interest rates aren’t as attractive unless their prices fall.
• Borrowing costs rise. Higher yields affect not just government bonds but also mortgages, corporate loans, and other forms of debt.

Long-Term vs. Short-Term Treasurys

One of the article’s main points is that long-term bond yields (like the 10-year Treasury) have been more influenced by the White House’s spending and policy agenda than by the Fed’s short-term interest rate decisions.

• Short-term bonds (like 2-year Treasurys) reflect expectations of what the Fed will do next.
• Long-term bonds (like 10-year Treasurys) are influenced by broader economic and political factors such as government spending, inflation expectations, and investor

It’s important to note there’s no single consensus on where yields will go next. Some, like BlackRock’s CEO Larry Fink, think yields on the 10-year Treasury could keep climbing (to 5.5% or higher). Others, like Morgan Stanley researchers, expect yields could fall closer to 3.5% by year-end. The takeaway? No one knows for sure—so it’s all about understanding risks and being prepared.

Key Considerations for Bond Buyers

Your time horizon:

If you plan to hold bonds until they mature (for example, 2 years or 10 years), short-term ups and downs in bond prices may not matter as much. You’ll collect interest (coupon payments), and at maturity, you’ll get your original principal back.

The impact of rising or falling rates:
If rates rise further, bond prices generally fall. If you need to sell before your bond matures, you might face a loss. On the flipside, if rates fall, bonds you already hold can become more valuable.

Economic and political uncertainty:

Policies around taxes, tariffs, immigration, and spending can feed into inflation and deficit concerns. These factors, in turn, can influence bond yields more than day-to-day changes in the Fed’s short-term interest rates.

Putting It All Together

• Bond yields are influenced by many factors, not just the Fed’s rate moves. In today’s environment, policy decisions and government borrowing can strongly drive long-term yields.
• Be mindful of your investment timeline. If you don’t need the money anytime soon and plan to hold bonds to maturity, short-term price swings might not matter as much.
• Opinions vary among experts, and predicting interest rates is notoriously difficult. That’s why many experienced investors diversify their portfolios between bonds and stocks, and keep an eye on both economic signals and political developments.

The main message is that if you’re a bond investor—or are thinking about becoming one—don’t just look at the Federal Reserve’s actions. Also pay attention to the White House’s fiscal and policy decisions, which can sway long-term Treasury yields in ways that interest-rate changes don’t always capture.

In the end, whether it’s “the right time” to buy bonds depends on how long you plan to hold them, your tolerance for potential price swings, and the broader economic and political landscape. By keeping these factors in mind, you’ll have a clearer picture of the risks and rewards of investing in bonds—and hopefully a bit less confusion as you make your decisions.