Upbeat music plays throughout.
Narrator: The bond market plays an important role in our economy. It's actually bigger than the stock market.
On-screen text: Source: SIFMA and The World Bank
Narrator: As of 2020, the U.S. bond market had some $50.1 trillion outstanding dollars invested, while the market cap for the entire U.S. stock market is just $40.7 trillion.
The bond market is made up of issuers—like the federal government, municipalities, and corporations—looking to borrow money from investors.
These issuers use this borrowed money for different reasons. The federal government might use this money to make Social Security payments or fund the construction of infrastructure like roads.
A city or town might sell municipal bonds and use the money to fund local projects, like building a new airport or building schools.
Corporations may tap into bonds for the same reason—to fund projects. For example, a tech company might use the money to finance a new factory that will produce the next gadget. New projects could have a positive impact on the economy as a whole. The new factory creates new jobs, thus fueling the economy.
It all begins with a bond transaction between an issuer and an investor. This transaction helps the issuer raise money to finance projects, and the investor benefits by receiving interest on their investing capital.
On-screen text: [Schwab logo] Own your tomorrow®
