Is the Bond Market Signaling Danger? Or Opportunity?

Tiny changes often are nothing more than that: small, meaningless shifts.I tell myself that whenever I gain a couple of pounds.

Who cares? It doesn’t matter, unless it turns out to be a trend — and my pants no longer fit.Bond yields are a little like that.Small increases don’t really matter.

But when they continue, and when those yields cross certain thresholds, those increases can matter a great deal.Bond yields and prices move in opposite directions.Falling prices and ascending yields over the last couple of weeks have broken through important psychological levels, including at least one that was last breached in 2007, just before the great financial crisis.Climbing yields mean higher costs for mortgages and loans, adding expenses for ordinary people and business executives alike and, ultimately, slowing the economy.

Whether the bond market right now is signaling serious trouble ahead or simply offering investors some enticing deals can’t really be known.But, suddenly, it’s worth paying close attention to those tiny changes in numbers.Consider that on May 13, at the government’s auction of brand-new 30-year Treasuries, buyers demanded an interest rate of 5.046 percent — and that a yield above 5 percent hadn’t been required to sell those bonds since 2007.

On the open market, 30-year Treasury bonds were trading with yields just below 5.2 percent on Wednesday.Recall that 2007 marked the start of an enormous recession, deep unemployment and a tremendous downturn in the stock market.Yields fell sharply as the economy shriveled and demand for goods and services shrank.

The Federal Reserve cut short-term interest rates to near zero, and the bond market dropped longer-term rates, too.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank yo...