What are bond yields?

A bond yield is like the amount of candy you get for lending your favorite toy to a friend.

Imagine you have a super cool toy that everyone wants to play with. You decide to lend it to your friend for a week, and in return, they give you some candy every day. The more candy you get each day, the better deal you had.

Now think of bonds like those toys. When you buy a bond, you're lending money to someone, maybe a company or the government, and they promise to pay you back with extra money (like interest) over time.

The bond yield is how much extra money you get compared to how much you lent out.

If you lend $100 and get $5 in extra money each year, your bond yield is 5%. It's like getting 5 pieces of candy for every $100 toy you lend.

But if the friend (or company) isn't doing well, they might offer more candy to convince you to keep lending them the toy, that’s when bond yields go up.

If things are great and your friend is happy to give you just a little candy, bond yields go down.

So, bond yields are like the candy you get for sharing your toy, more candy means better deals, less candy means it's not as sweet.