Bond Yield

When a bond trades on the open market, its price moves up and down with supply and demand. Because the bond's fixed payments stay the same regardless of price, the yield — the return implied by those payments relative to what you pay — moves in the opposite direction. This is the famous seesaw: price up, yield down; price down, yield up. It confuses many newcomers, but the math is straightforward: if you pay more for the same stream of payments, your effective return shrinks.

Suppose a bond promises to pay $50 a year and was issued at $1,000. Its yield is 5%. If the bond's market price later falls to $900, that same $50 payment now represents a yield of roughly 5.6% on what a new buyer actually spends. Nothing about the bond itself changed — only the price, and therefore the implied return. You can see live government bond yields across countries on our bonds page.

Yields matter far beyond bond markets. Economists read rising government yields as a signal that borrowing costs across the whole economy are tightening, since mortgages, corporate loans, and even stock valuations are often benchmarked against them. For a deeper look at how prices and returns interact, see how market quotes work.

A common confusion: "yield" and "coupon" are not the same thing. The coupon is fixed at issuance; the yield changes every time the bond's price changes.