SHORT ANSWER
The core idea
Fiscal policy can change expected government borrowing, growth, inflation and the perceived sustainability of public finances.
THE MECHANISM
What is happening underneath
Those changes affect both the amount of bonds investors must absorb and the compensation they demand.
MARKET INTERPRETATION
How investors should read it
The reaction depends on the economy's spare capacity, monetary policy, currency regime and credibility.
BONDSTATS TAKEAWAY
The same market move can carry different information depending on which maturity, issuer and risk premium is changing. Read the question together with the underlying concepts rather than treating one price move as a universal signal.
RELATED CONCEPTS
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