> In order to raise money by selling bonds, the government has to make bonds an attractive asset. That is, the bonds have to be a good investment, and provide good returns to those who buy the bonds.

> This means that the federal reserve must raise the interest rate, because that determines the yield of bonds.

That's just plain wrong. The yield of a bond is determined by supply and demand of this very bond, it does not depend on the interest rates from the fed. If no one wants to buy this bank's bonds at 1%, they have to raise the interest of it. There were quite a few high yield bonds even before the rate hike.