Fixed Income · 16 Oct · 7 min read
What Is the Yield Curve?
The yield curve plots government bond yields from short to long maturities. Normal, flat and inverted shapes, what moves each end and how traders read it.
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How to Calculate Yield to Maturity
Yield to maturity is the annual return if you buy a bond today and hold it to maturity. A 5% 5-year bond bought at $950 yields about 6.19%. How to calculate it.
Treasury Bills vs Notes vs Bonds
Treasury bills mature in a year or less with no coupon; notes in 2 to 10 years and bonds in 20 or 30 years, paying interest twice a year. How the three compare.
What Happened in the 2022 UK Gilt Crisis?
After the September 2022 mini-budget, 30-year gilt yields jumped about 140 bp in three days, LDI funds faced margin calls and the BoE pledged £65 billion.
What Was the 2013 Taper Tantrum?
In May 2013 Bernanke said the Fed could slow bond buying; the 10-year yield rose from 1.6% to 3% by September and EM currencies fell. What happened and why.
How to Calculate a Real Yield
Real yield = nominal − inflation, or (1 + nominal) ÷ (1 + inflation) − 1. A 4.2% bond with 3% inflation yields about 1.17% real. How to calculate and read it.
Investment-Grade vs High-Yield Bonds
Investment-grade bonds have higher ratings and lower yields; high-yield bonds pay more for higher default risk and act more like stocks. How they compare.
What Does an Inverted Yield Curve Mean?
An inverted yield curve means short-term yields exceed long-term ones, usually as markets expect cuts. It preceded past recessions, but 2022–2024 did not. Why.
How Bonds Work
A bond is a loan that pays a coupon and repays face value at maturity. How bonds work, how they are priced, why prices fall when rates rise and the main risks.
What Is a Credit Spread?
A credit spread is the extra yield a corporate bond pays over a government bond. How it is calculated, what widening and narrowing signal and recent extremes.
How to Read Breakeven Inflation From Bond Yields
Breakeven inflation = nominal Treasury yield − TIPS yield. With the 10-year at 4.20% and TIPS at 1.90%, markets imply about 2.3% inflation. How to read it.
Why Bond Prices Fall When Yields Rise
Fixed coupons are worth less when new bonds pay more, so prices fall until yields match. A 4% 10-year bond drops about 7.7% if yields rise to 5%. Why it occurs.