Hey Lykkers! Pop quiz: which market is bigger, stocks or bonds? If you said stocks, you’re in good company—most people picture the frantic energy of the New York Stock Exchange as the center of the financial universe. But here’s the quiet truth: the bond market is the true giant, dwarfing the stock market by a staggering margin.

Globally, the bond market is estimated to be over $130 trillion, while the global stock market is roughly half that size. So, why does the world of debt quietly trump the world of ownership? Let’s pull back the curtain.

The Simple Reason: Everyone is a Borrower

Think of it this way: Governments and companies must borrow, but they don’t have to sell shares.

A publicly traded company might issue stock once during an IPO and maybe occasionally afterwards. But its need for debt is constant and recurring. It needs loans to build factories, fund acquisitions, and manage cash flow. Every new bond is a new slice of debt added to the market.

Now, multiply that by the biggest borrower of all: Governments. National, state, and city governments finance their operations—from building roads and funding schools to paying salaries—primarily by issuing bonds. The U.S. national debt alone, financed by Treasury securities, is a multi-trillion-dollar mountain that constantly needs refinancing. As economist Dr. Carmen Reinhart co-wrote in her seminal work This Time is Different, “Sovereign debt is the oldest and most common form of government financing.” The sheer scale of global government borrowing forms the bedrock of the bond market’s size.

It’s Not Just Size, It’s Frequency

The stock market gets the headlines, but the bond market is the workhorse. While a stock might trade hands between investors, the underlying share exists until the company goes private or dissolves. The bond market, however, is fueled by constant issuance and maturation.

A 10-year Treasury bond issued today will mature in a decade and need to be replaced with a new bond. This cycle of refinancing is perpetual, creating a relentless churn of new debt instruments. Furthermore, large institutions like pension funds, insurance companies, and central banks don’t just trade bonds for speculation; they buy them to hold and match their long-term liabilities. This creates a deep, constant demand for new debt.

The Invisible Engine of Everything

Here’s the part most people miss: the bond market isn’t just an investment arena—it’s the plumbing of the global economy. Its yields set the “risk-free” rate that dictates the cost of borrowing for everyone: mortgages, car loans, and business expansion.

When the bond market sneezes, the entire economic system catches a cold. Investment guru Ray Dalio explains this in his principles, noting that “the bond market is the dominant force in driving the economic and market cycles… because it is the primary conduit of credit, which is the economy’s lifeblood” (Dalio, Principles for Navigating Big Debt Crises). It’s the silent, foundational layer upon which the flashier world of stocks is built.

A Matter of Stability vs. Spectacle

Finally, the bond market’s size reflects a fundamental human and institutional need: capital preservation and predictable income. While stocks offer growth, bonds offer stability and regular coupon payments. This makes them the asset of choice for anyone who can’t afford wild volatility—think retirees, university endowments, or your local insurance company. The demand for safety is a massive, constant force.

So, Lykkers, the next time you see a stock market ticker, remember: it’s just the visible tip of the financial iceberg. Beneath the surface lies the vast, deep, and indispensable world of bonds—funding governments, building infrastructure, and setting the price of money for us all. It’s not as thrilling, but it’s undoubtedly more essential.

Which market mystery should we explore next?