Bond Market

What a bond is

A bond is a loan, packaged as a tradable security. When you buy a bond you lend money to an issuer — a government, a municipality, or a company — and in exchange you are entitled to periodic interest payments plus repayment of the principal when the bond matures. The bond market is where those loan contracts change hands between the original buyers and every subsequent owner.

Globally, the bond market is substantially larger than the equity market and is where the cost of borrowing for governments, companies, and households is ultimately set. Interest rates on mortgages, corporate debt, and student loans all tie back to underlying bond yields.

Price and yield move in opposite directions

Every bond has two headline numbers that move inversely. If the market demands a higher yield — perhaps because inflation expectations have risen — the price of existing bonds has to fall so that their fixed coupon payments produce that higher yield on the new entry price. Falling yields mean rising prices, and rising yields mean falling prices. This is the single most important mechanic to internalise when reading bond data.

The yield you see quoted on a government bond is the yield to maturity: the annualised return an investor would earn if they bought the bond at today's price and held it to maturity, receiving every coupon on schedule. It bakes together both the coupon rate and any gain or loss relative to par.

The key US Treasury benchmarks

• US 2-year (US02Y). Short end of the curve, highly sensitive to expectations about the Federal Reserve's policy rate over the next one to two years.
• US 10-year (US10Y). The single most quoted interest rate in the world. Used as the benchmark for mortgage rates, corporate borrowing, and equity valuation models.
• US 30-year (US30Y). Long end of the curve. Reflects long-run growth and inflation expectations.

The difference between the 2-year and 10-year yields is watched as a barometer of the economic cycle. When the 2-year rises above the 10-year — a condition known as an inverted yield curve — it has historically preceded US recessions, though the timing and signal quality vary.

International government bonds

Foreign sovereign yields matter because they anchor the cost of capital in their home jurisdictions and because relative-yield differentials drive currency flows. Commonly quoted global benchmarks include the German 10-year (the euro-area reference rate), the UK gilt 10-year, the Japanese government bond (JGB) 10-year, and Canadian and Australian 10-year equivalents.

Corporate and credit bonds

Corporate bonds add a credit spread on top of the equivalent-maturity government yield. That spread compensates investors for default risk. Major categories:

• Investment grade. Rated BBB-/Baa3 or better. Blue-chip corporates with low default risk. Commonly tracked via the LQD ETF.
• High yield (junk). Rated below investment grade. Higher coupons, higher default risk. Commonly tracked via HYG or JNK.
• Municipals. Debt issued by US state and local governments, often tax-advantaged for US investors.
• Emerging market sovereigns. Debt of emerging-market governments, trading at spreads that reflect local political and currency risk.

What drives bond yields

• Central-bank policy. The policy rate and balance-sheet stance of the Fed, ECB, BoE, and BoJ directly drive short-term yields and heavily influence longer-term yields.
• Inflation expectations. Bondholders require compensation for the erosion of their fixed nominal payments. Rising inflation expectations push nominal yields higher.
• Real growth. Stronger growth typically means higher real rates as the economy absorbs more capital.
• Risk appetite. In risk-off episodes capital flows into high-quality government bonds, pushing yields lower. Credit spreads typically widen at the same time.

How to use this page

The overview widget above covers US Treasury yields across the curve, the main European and Asian sovereigns, and bond-market ETFs. The US 10-year technical-analysis block shows how momentum and trend indicators are positioned on the world's benchmark rate. For deeper charting, see the Advanced Charts page; the economic calendar covers the releases — CPI, employment, FOMC meetings — that most reliably move bond prices.

Last reviewed on April 24, 2026. Fixed-income investments carry interest-rate, credit, and liquidity risk. Nothing on this page is a recommendation to buy or sell any specific security. See our Disclaimer.