Bonds and Treasury Yields: How They Are Related
In this article, we will show the simple relationship between bonds and treasury yields.
Bonds are debt instruments that are used by governments and companies to borrow money from investors at cheap rates. Instead of borrowing from lending institutions at exorbitant rates and under conditions of repayment which may be too stringent for the borrower, it may be more convenient for the borrower to approach investors through the bond market.
Best Bond Brokers
-
IG consistently ranks in the top 5 for its versatile bond offerings. Traders have the opportunity to invest in global bond futures and ETFs through CFDs, share dealing, or spread betting, all with competitive spreads starting from just 1 point. For those more serious about trading, correlated interest rate products are available, alongside extra investment perks like dividend coupons.
Instruments Regulator Platforms CFDs (not in US), Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting (UK only) CFTC, NFA, FCA, BaFin, ASIC, FINMA, MAS, JFSA, FMA, DFSA, BMA Web, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral, ProRealTime Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (Retail), 1:222 (Pro) -
Trade Nation provides a selection of well-known bond futures through its exclusive TN Trader platform. With a leverage ratio of 1:5, low fixed spreads, and no required minimum deposit, Trade Nation is an excellent choice for novice traders keen to enter the bond market with ease. The platform also features robust analysis tools, such as a signal centre, to identify market opportunities effectively.
Instruments Regulator Platforms CFDs, Forex, Indices, Shares, Commodities, Futures, Bonds, Spread Betting (UK and Ireland only), Cryptos (Bahamas entity only) FCA, ASIC, CMVM , FSCA, SCB, FSA TN Trader, MT4, TradingView Min. Deposit Min. Trade Leverage $0 0.1 Lots 1:30 -
Interactive Brokers remains a leading bond broker, offering an impressive range of over 1 million products. The firm's Bond Search tool efficiently filters through popular treasuries, notes, and niche municipal securities. Their commission rates are competitive, beginning at 0.2 basis points for the initial $1 million of face value.
Instruments Regulator Platforms Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, Cryptocurrencies, CFDs SEC, FINRA, CFTC, NFA, CIRO, FCA, CBI, ASIC, SFC, SEBI, JFSA, MAS Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower Min. Deposit Min. Trade Leverage $0 $100 1:30 -
Accessible on both MT4 and MT5 platforms, Vantage's bond offerings span various government and corporate markets. Traders can engage with just 1 lot and speculate on fluctuating prices. A comprehensive selection of educational resources and market analysis tools is also available for those aiming to enhance their short-term trading strategies.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Spread betting FCA, ASIC, FSCA, VFSC, CIMA ProTrader, MT4, MT5, TradingView, DupliTrade Min. Deposit Min. Trade Leverage $50 0.01 Lots 1:30 -
Spreadex provides spread betting and CFDs on over 19 global bonds and interest rates, such as Japanese Government Bonds and Euribor futures. With spreads starting at 2, traders access leverage up to 1:30. Both novices and experienced traders can enhance their strategies using the platform's top-tier features, which include integrated macroeconomic data and advanced order options.
Instruments Regulator Platforms Forex, CFDs, Indices, Commodities, Stocks, Crypto, Bonds, Interest Rates, ETFs, Options, Spread Betting FCA Spreadex Platform, TradingView, AutoChartist Min. Deposit Min. Trade Leverage £0 (but £5 minimum for standard payment methods) £0.01 1:30 -
CMC Markets provides a superb range of over 50 government bonds and interest rate products, with spreads starting at just 1 point. Traders can enhance their strategies using the company's unique market insights and pattern recognition tools. Additionally, those trading in large volumes can benefit from spread discounts of up to 21% on treasuries through the CMC Price+ programme.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, ETFs, Treasuries, Custom Indices, Spread Betting, Certificates and Warrants (Germany and Austria) FCA, ASIC, MAS, CIRO, BaFin, FMA, DFSA Web, Spectre, MT4, MT5, TradingView Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (Retail), 1:500 (Pro) -
ActivTrades provides access to six bonds, such as the US Treasury Bond and Euro Bund, with competitive spreads starting at 0.5 pips. Its real strength lies in swift and efficient order execution, catering perfectly to active traders.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, Bonds, ETFs, Futures, Cryptos (location dependent) FCA, CMVM, SCB, FSC, BACEN, CVM ActivTrades, MT4, MT5, TradingView Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (UK and EU), 1:400 (Global & Pro)
IG
Trade Nation
Interactive Brokers
Vantage FX
Spreadex
CMC Markets
ActivTradesSafety Comparison
Compare how safe the Bonds and Treasury Yields: How They Are Related are and what features they offer to protect traders.
| Broker | Trust Rating | FCA Regulated | Negative Balance Protection | Guaranteed Stop Loss | Segregated Accounts |
|---|---|---|---|---|---|
| IG | ✔ | ✔ | ✔ | ✔ | |
| Trade Nation | ✔ | ✔ | ✘ | ✔ | |
| Interactive Brokers | ✔ | ✔ | ✘ | ✔ | |
| Vantage FX | ✔ | ✔ | ✘ | ✔ | |
| Spreadex | ✔ | ✔ | ✔ | ✔ | |
| CMC Markets | ✔ | ✔ | ✔ | ✔ | |
| ActivTrades | ✔ | ✔ | ✘ | ✔ |
Payments Comparison
Compare which popular payment methods the Bonds and Treasury Yields: How They Are Related support and whether they have trading accounts denominated in British Pounds (GBP).
| Broker | GBP Account | Debit Card | Credit Card | Neteller | Skrill | Apple Pay |
|---|---|---|---|---|---|---|
| IG | ✔ | ✔ | ✔ | ✘ | ✘ | ✘ |
| Trade Nation | ✔ | ✔ | ✔ | ✘ | ✔ | ✘ |
| Interactive Brokers | ✔ | ✘ | ✘ | ✘ | ✘ | ✘ |
| Vantage FX | ✔ | ✔ | ✔ | ✔ | ✔ | ✘ |
| Spreadex | ✔ | ✔ | ✔ | ✘ | ✘ | ✘ |
| CMC Markets | ✔ | ✔ | ✔ | ✘ | ✘ | ✘ |
| ActivTrades | ✔ | ✔ | ✔ | ✔ | ✔ | ✘ |
Mobile Trading Comparison
How good are the Bonds and Treasury Yields: How They Are Related at mobile trading using apps or other mobile interfaces.
| Broker | Mobile Apps | iOS Rating | Android Rating | Smart Watch App |
|---|---|---|---|---|
| IG | iOS & Android | ✔ | ||
| Trade Nation | iOS & Android | ✘ | ||
| Interactive Brokers | iOS & Android | ✔ | ||
| Vantage FX | iOS & Android | ✘ | ||
| Spreadex | iOS & Android | ✘ | ||
| CMC Markets | iOS & Android | ✘ | ||
| ActivTrades | iOS & Android | ✘ |
Beginners Comparison
Are the Bonds and Treasury Yields: How They Are Related good for beginner traders, that might want an affordable setup to get started, along with good support and educational resources?
| Broker | Demo Account | Minimum Deposit | Minimum Trade | Support Rating | Education Rating |
|---|---|---|---|---|---|
| IG | ✔ | $0 | 0.01 Lots | ||
| Trade Nation | ✔ | $0 | 0.1 Lots | ||
| Interactive Brokers | ✔ | $0 | $100 | ||
| Vantage FX | ✔ | $50 | 0.01 Lots | ||
| Spreadex | ✘ | £0 (but £5 minimum for standard payment methods) | £0.01 | ||
| CMC Markets | ✔ | $0 | 0.01 Lots | ||
| ActivTrades | ✔ | $0 | 0.01 Lots |
Advanced Trading Comparison
Do the Bonds and Treasury Yields: How They Are Related offer features that allow for more advanced trading strategies?
| Broker | Automated Trading | Pro Account | Leverage | VPS | AI | Low Latency | Extended Hours |
|---|---|---|---|---|---|---|---|
| IG | Expert Advisors (EAs) on MetaTrader, build your own on ProRealTime | ✔ | 1:30 (Retail), 1:222 (Pro) | ✔ | ✔ | ✔ | ✔ |
| Trade Nation | Expert Advisors (EAs) on MetaTrader | ✘ | 1:30 | ✘ | ✘ | ✘ | ✘ |
| Interactive Brokers | Capitalise.ai, TWS API | ✘ | 1:30 | ✘ | ✔ | ✔ | ✔ |
| Vantage FX | Myfxbook AutoTrade, Expert Advisors (EAs) on MetaTrader | ✘ | 1:30 | ✔ | ✘ | ✘ | ✘ |
| Spreadex | ✘ | ✔ | 1:30 | ✘ | ✘ | ✔ | ✔ |
| CMC Markets | Expert Advisors (EAs) on MetaTrader | ✔ | 1:30 (Retail), 1:500 (Pro) | ✔ | ✘ | ✔ | ✔ |
| ActivTrades | Yes (APIs), Expert Advisors (EAs) on MetaTrader | ✔ | 1:30 (UK and EU), 1:400 (Global & Pro) | ✘ | ✘ | ✔ | ✘ |
Detailed Rating Comparison
Use this heatmap to compare our detailed ratings for all of the Bonds and Treasury Yields: How They Are Related.
| Broker | Trust | Platforms | Mobile | Assets | Fees | Accounts | Support | Research | Education |
|---|---|---|---|---|---|---|---|---|---|
| IG | |||||||||
| Trade Nation | |||||||||
| Interactive Brokers | |||||||||
| Vantage FX | |||||||||
| Spreadex | |||||||||
| CMC Markets | |||||||||
| ActivTrades |
Our Take On IG
"IG offers a complete package: an easy-to-use web platform, top-tier beginner education, enhanced charting via TradingView, up-to-date data, and strong trade execution for seasoned traders."Tobias Robinson
Reviewer
Pros
- The IG app provides an excellent mobile trading experience with an intuitive design, earning it the Runner Up position in our 'Best Trading App' award.
- As a seasoned broker, IG adheres to stringent regulatory standards across various regions, ensuring significant trust.
- IG secured a crypto asset license from the FCA, enabling its return to the UK market. It now offers buying, selling, and storage services for over 55 digital tokens with fees starting at 1.49%, all under FCA regulation.
Cons
- IG has ended its swap-free account, diminishing its attractiveness to Islamic traders.
- In the UK and EU, negative balance protection is available. However, US clients lack account protection and guaranteed stop losses.
- Beginners may find IG's fees complicated, as they vary depending on the trades or services. This could cause confusion and unexpected costs.
Our Take On Trade Nation
"Trade Nation caters to discretionary traders aiming to speculate on major indices like the US 500 or liquid FX pairs, with the certainty of fixed spreads. Our tests revealed the TN Trader's fixed spreads to be advantageous, especially during economic announcements, thanks to its dependable charting and capped spreads."Tobias Robinson
Reviewer
Pros
- Trade Nation's 2026 alliance with Volt has streamlined payments for Australian traders, enabling instant deposits and withdrawals via PayID. Faster payout features are also anticipated for UK and EU clients.
- The demo includes a £5,000 practice account, and you can request a personalised platform walkthrough via callback. This level of individual assistance is uncommon.
- The broker expanded into Europe by launching regulated online trading services, after securing authorization from Portugal's CVMV, enhancing safety measures for European residents.
Cons
- The FCA, CMVM, and ASIC clients are ineligible for the 2–20% rebate scheme. Consequently, active traders in these areas cannot receive transaction rebates.
- Offshore SCB and FSA firms offer retail investors leverage up to 1:200 and 1:500. In contrast, regions like the UK, Europe, and Australia cap leverage at 1:30. Thus, an FSA client can access 16 times more exposure than a UK retail client on identical trades. However, this comes with reduced oversight and no compensation schemes.
- There is no raw or ECN pricing tier, often favoured by traders. Regardless of your deposit or trading volume, you receive the same fixed (or variable on MT4) pricing as novices, rendering it particularly unsuitable for scalpers.
Our Take On Interactive Brokers
"Interactive Brokers ranks highly for seasoned traders due to its robust charting platforms, live data, and bespoke layouts via the new IBKR Desktop app. Its competitive pricing and sophisticated order choices appeal to traders, and its wide equity options are industry-leading."Tobias Robinson
Reviewer
Pros
- The TWS platform is tailored for intermediate and advanced traders, featuring over 100 order types and a dependable real-time market data feed with exceptional uptime.
- The new IBKR Desktop platform combines the top features of TWS with customised tools such as Option Lattice and MultiSort Screeners, providing an impressive trading experience for traders of all skill levels.
- IBKR is a highly respected brokerage, regulated by top-tier authorities, ensuring the integrity and security of your trading account.
Cons
- IBKR offers a variety of research tools, but their inconsistent placement across trading platforms and the 'Account Management' webpage creates a confusing experience for users.
- You are limited to a single active session per account, meaning you cannot use both your desktop programme and mobile app at the same time. This restriction can occasionally lead to a frustrating experience for traders.
- TWS has a steep learning curve, making it difficult for newcomers to navigate and grasp its features.
Our Take On Vantage FX
"Vantage is an ideal choice for CFD traders looking for a well-regulated broker with access to the dependable MetaTrader platforms. With a swift sign-up process and a minimum deposit of $50, starting trading is simple and fast."Tobias Robinson
Reviewer
Pros
- Vantage upholds a high trust score through its solid reputation, backed by premier regulation from the FCA and ASIC.
- ECN accounts offer strong competitiveness with spreads starting at 0.0 pips and a commission of $1.50 per side for Pro ECN accounts.
- In 2026, the app was enhanced to provide comprehensive asset visibility, consolidating balances from Contract, Copy, and Funding accounts onto a single screen.
Cons
- It's unfortunate that some clients must register with the offshore firm, which provides reduced regulatory safeguards.
- To access optimal trading conditions, a substantial deposit of $10,000 is required. This includes a commission of $1.50 per transaction per side.
- Based on tests, average execution speeds of 100ms to 250ms are slower compared to other options.
Our Take On Spreadex
"Spreadex attracts UK traders keen on spread betting in financial markets and traditional sports wagers. It offers low fees for short trades, and spread bet profits are tax-free. With a robust charting platform and no minimum deposit, it's easy to begin."Tobias Robinson
Reviewer
Pros
- Spreadex has integrated Autochartist-powered trading signals into its desktop platform. This offers real-time, pattern-based insights aimed at assisting active traders in spotting potential opportunities.
- Over 10,000 instruments and superior access to AIM small-caps are available, including exclusive offerings not found with larger brokers. This provides UK-centric traders with enhanced opportunities in niche small-cap configurations.
- Our fee analysis shows the EUR/USD at 0.6 pips during off-peak hours. FTSE and S&P 500 spreads remain competitively priced for spread-betting brokers. Trading costs are reasonable.
Cons
- CFDs, financial spread bets, sports, and casino activities are combined in one account balance. For serious traders, this means non-trading losses can immediately decrease the margin for trading positions.
- Spreadex lacks MT4, MT5, cTrader, API, VPS, and algorithmic trading support, making it ideal for active traders rather than those using automated or bespoke trading systems.
- Execution is satisfactory, though not top-tier. Tests showed 0.2–0.4 pip slippage in stable liquid markets, but news-induced volatility increased some fills to around 1 pip. Thinner AIM stocks often experienced 2–4 point slippage.
Our Take On CMC Markets
"Equipped with advanced charts and a broad array of tradable CFDs, including an unmatched selection of currencies and bespoke indices, CMC Markets offers an excellent online platform for traders at any level."Tobias Robinson
Reviewer
Pros
- CMC Markets has introduced an AI News feature. This leverages AI to highlight and summarise market stories instead of executing trades, suggesting the future direction of broker research tools.
- We upgraded its 'Assets & Markets' rating due to frequent product expansions in 2025 and 2026. These include extended hours for 5,000+ US stocks and ETFs, new share CFDs, certificates, warrants, and fractional shares in certain areas.
- The CMC web platform offers an excellent user experience, featuring advanced trading chart tools and customisable options, suitable for both novice and seasoned traders. It also supports MT4, MT5, and, from 2025, TradingView.
Cons
- Although there have been improvements, the online platform still needs further refinement to match the user-friendly trading experience offered by competitors such as IG.
- The CMC Markets app provides a comprehensive trading package; however, its design and user experience lag behind market leaders such as eToro.
- A £15 monthly inactivity fee applies after a year of no activity, possibly discouraging casual investors.
Our Take On ActivTrades
"ActivTrades stands out for traders at every level, offering nearly unparalleled execution speeds of 4ms. Choose from top-tier trading software like MT4, MT5, TradingView, or the user-friendly ActivTrader, perfect for budding traders."Tobias Robinson
Reviewer
Pros
- ActivTrades is a reputable firm with over 20 years in the financial sector. It holds authorizations from three top-tier regulatory bodies, according to DayTrading.com's Regulation & Trust Rating. For UK traders, it offers enhanced protection with £1 million in investor compensation, surpassing the £85,000 provided by the FSCS, should the firm face insolvency.
- With execution speeds averaging 4ms and an order completion rate of 93.6%, ActivTrades provides an outstanding platform for traders. It supports rapid strategies without imposing limits on short-term approaches.
- Based on our tests, ActivTrades offers swift and reliable support via live chat, email, and phone in multiple languages. This makes it an excellent choice for both traders and newcomers seeking quality assistance.
Cons
- The platform lacks features for copy or social trading, which is a disadvantage for traders interested in passive investing or replicating the trades of seasoned traders. This is particularly evident when compared to eToro and Vantage.
- ActivTrades needs improvement in educational resources to compete with firms like XTB and CMC Markets. While it offers well-presented and informative webinars, the selection of courses and quizzes remains limited, hindering a more comprehensive and engaging learning experience for traders.
- The selection of over 1,000 markets includes forex, commodities, indices, and ETFs. However, the overall choice of asset classes is limited, with no stocks available outside the US, UK, and Europe. In comparison, BlackBull provides access to more than 26,000 markets.
Bonds are known by several names in several countries. In the US, Nigeria and some other countries, they are known as Treasury bills and Treasury Notes.
Treasury yields refer to the percentage interest rate that a bond investor can expect to earn for his bond investments. In other words, the treasury yield is the payment on a bond. Treasury yields can fluctuate on the market, even though when an investor buys a bond, the payable rate at which the negotiation is settled on will not change until the bond matures.
Different countries have different yields on their bonds. In addition to the present yield, it is important for investors to know what the annual yield changes have been, and the day to day and month to month changes in the yield rates have also been. This information can make the difference between making money on a bond investment, and buying a bond which will eventually get blown off by falling yields or falling prices as a result of inflationary pressures.
Below is a table showing the treasury yields of different countries.
| Country | |||||||
| Greece |
16.78 |
17.67 |
-0.89 |
20.18 |
-3.40 |
24.34 |
-7.56 |
| Pakistan |
11.45 |
11.55 |
-0.10 |
11.60 |
-0.15 |
12.07 |
-0.62 |
| Kenya |
11.00 |
11.00 |
0.00 |
10.00 |
1.00 |
0.00 |
|
| Vietnam |
10.19 |
10.13 |
0.06 |
9.96 |
0.23 |
0.00 |
|
| Brazil |
9.45 |
9.47 |
-0.02 |
9.97 |
-0.52 |
12.55 |
-3.10 |
| India |
8.13 |
8.15 |
-0.02 |
8.17 |
-0.04 |
8.81 |
-0.68 |
| Turkey |
8.07 |
8.13 |
-0.06 |
8.31 |
-0.24 |
0.00 |
|
| Portugal |
7.57 |
8.02 |
-0.45 |
8.61 |
-1.04 |
12.38 |
-4.81 |
| Russia |
7.33 |
7.41 |
-0.08 |
7.76 |
-0.43 |
6.00 |
1.33 |
| Romania |
6.90 |
6.90 |
0.00 |
6.80 |
0.10 |
0.00 |
|
| Iceland |
6.90 |
6.95 |
-0.05 |
6.96 |
-0.06 |
0.00 |
|
| Peru |
6.76 |
6.76 |
0.00 |
6.76 |
0.00 |
6.76 |
0.00 |
| Hungary |
6.72 |
6.61 |
0.11 |
7.37 |
-0.65 |
7.78 |
-1.06 |
| South Africa |
6.62 |
6.75 |
-0.13 |
6.61 |
0.01 |
8.20 |
-1.58 |
| Colombia |
6.07 |
6.03 |
0.04 |
6.45 |
-0.38 |
7.62 |
-1.55 |
| Indonesia |
5.72 |
5.83 |
-0.11 |
5.98 |
-0.26 |
6.37 |
-0.65 |
| Slovenia |
5.51 |
6.00 |
-0.49 |
6.44 |
-0.93 |
0.00 |
|
| Croatia |
5.42 |
5.42 |
0.00 |
5.47 |
-0.05 |
0.00 |
|
| Mexico |
5.41 |
5.36 |
0.05 |
5.31 |
0.10 |
6.30 |
-0.89 |
| Chile |
5.39 |
5.40 |
-0.01 |
5.42 |
-0.03 |
0.00 |
|
| Spain |
5.39 |
5.79 |
-0.40 |
5.76 |
-0.37 |
5.55 |
-0.16 |
| Philippines |
5.17 |
5.08 |
0.09 |
4.86 |
0.31 |
0.00 |
|
| Ireland |
4.88 |
4.86 |
0.02 |
5.02 |
-0.14 |
8.21 |
-3.33 |
| Italy |
4.79 |
4.93 |
-0.14 |
5.12 |
-0.33 |
5.95 |
-1.16 |
| Poland |
4.48 |
4.60 |
-0.12 |
4.92 |
-0.44 |
5.81 |
-1.33 |
| Israel |
4.07 |
4.10 |
-0.03 |
4.28 |
-0.21 |
4.71 |
-0.64 |
| China |
3.50 |
3.48 |
0.02 |
3.52 |
-0.02 |
3.73 |
-0.23 |
| Thailand |
3.49 |
3.61 |
-0.12 |
3.83 |
-0.34 |
3.39 |
0.10 |
| New Zealand |
3.48 |
3.48 |
0.00 |
3.48 |
0.00 |
4.63 |
-1.15 |
| Malaysia |
3.46 |
3.48 |
-0.02 |
3.48 |
-0.02 |
3.74 |
-0.28 |
| Bulgaria |
3.30 |
3.40 |
-0.10 |
3.85 |
-0.55 |
0.00 |
|
| Australia |
3.13 |
3.17 |
-0.04 |
3.26 |
-0.13 |
4.50 |
-1.37 |
| South Korea |
3.02 |
2.95 |
0.07 |
3.06 |
-0.04 |
3.94 |
-0.92 |
| Qatar |
2.77 |
2.79 |
-0.02 |
3.03 |
-0.26 |
0.00 |
|
| Belgium |
2.43 |
2.41 |
0.02 |
2.65 |
-0.22 |
4.46 |
-2.03 |
| Czech Republic |
2.30 |
2.28 |
0.02 |
2.49 |
-0.19 |
3.25 |
-0.95 |
| France |
2.22 |
2.10 |
0.12 |
2.28 |
-0.06 |
3.32 |
-1.10 |
| Norway |
2.11 |
1.98 |
0.13 |
2.25 |
-0.14 |
2.53 |
-0.42 |
| Austria |
2.05 |
2.01 |
0.04 |
2.06 |
-0.01 |
3.09 |
-1.04 |
| United Kingdom |
1.88 |
1.83 |
0.05 |
1.84 |
0.04 |
2.56 |
-0.68 |
| Finland |
1.85 |
1.80 |
0.05 |
1.89 |
-0.04 |
2.62 |
-0.77 |
| Canada |
1.84 |
1.82 |
0.02 |
1.85 |
-0.01 |
2.37 |
-0.53 |
| Netherlands |
1.80 |
1.78 |
0.02 |
1.85 |
-0.05 |
2.57 |
-0.77 |
| United States |
1.77 |
1.72 |
0.05 |
1.75 |
0.02 |
2.23 |
-0.46 |
| Sweden |
1.66 |
1.56 |
0.10 |
1.56 |
0.10 |
1.95 |
-0.29 |
| Germany |
1.64 |
1.55 |
0.09 |
1.58 |
0.06 |
2.12 |
-0.48 |
| Denmark |
1.62 |
1.56 |
0.06 |
1.68 |
-0.06 |
2.32 |
-0.70 |
| Singapore |
1.33 |
1.32 |
0.01 |
1.48 |
-0.15 |
1.72 |
-0.39 |
| Taiwan |
1.17 |
1.15 |
0.02 |
1.18 |
-0.01 |
0.00 |
|
| Japan |
0.79 |
0.76 |
0.03 |
0.80 |
-0.01 |
1.03 |
-0.24 |
| Hong Kong |
0.78 |
0.78 |
0.00 |
0.81 |
-0.03 |
1.39 |
-0.61 |
| Switzerland |
0.55 |
0.52 |
0.03 |
0.61 |
-0.06 |
1.05 |
-0.50 |
(Source: © 2012 Trading Economics)
The data clearly shows the following information:
a) Treasury yields are not steady, even though the interest rates that bond investors earn on their investments usually do not change.
b) The higher yields are seen with countries where the risk of default is higher. This explains why Greece occupies the number one position on this list.
c) Another factor to look at is the rate of annual change in the treasury yield of a government bond. If we look at this list, we can see that the greatest swings are seen in countries with sovereign debt crises. So Greece, Portugal, Ireland and Brazil are tops in terms of changes in the yields.
Using this information, we can conveniently identify the factors that affect yield rates:
a) Inflation
What does inflation do to bond prices and yield rates? If the inflation rate exceeds the treasury yields that a bond is expected to pay the investor, the obvious effect is that the earnings from the bond will be worth less in future than it would have been. In order to militate against inflation risk, traders should avoid holding bonds for a very long time. With the global uncertainty in the financial markets that have been experienced for some years now, it really makes no sense holding a 30 year bond in this day and age.
b) Credit rating
Credit ratings are used to judge the ability of a bond issuer to pay back. If credit ratings of a bond issuer are low or are cut from higher levels, the treasury yields will have to be increased as an incentive for investors to take a chance on that bond. If ratings improve or the bond issuer is able to access finance to enable it settle its obligations, the treasury yield will fall. This explains why Greece’s bond yields were as high as 24% last year, but has fallen to about 16% as it has accessed bailout money from the ECB and other lenders.
c) Interest rates
If interest rates are increased to a point where it exceeds a bond holder’s yields, investors will flock more to the bond with higher rates and the value of the present bond will drop, leading to a bond’s price being discounted.