A government bond is debt issued by the government and sold to investors to support government spending.
Some government bonds may have periodic interest payments. Other government bonds do not pay coupons and are instead sold at a discount.
Government bonds are considered low-risk investments because they are backed by the government. The US Treasury offers various types of bonds that are considered among the safest in the world.
Because of the relatively low risk, government bonds usually pay low interest rates.
Flattening of the yield curve is when short-term and long-term bonds do not undergo noticeable changes in rates. This makes long-term bonds less attractive to investors.
The Treasury Current Yield Curve graphically shows the current yield versus maturity of the most recently traded US Treasury securities and is the primary benchmark used in the pricing of fixed income securities.
Taper antrum refers to the 2013 collective reactionary panic that caused US Treasury yields to spike after investors learned that the Federal Reserve was slowly putting a brake on its quantitative easing (QE) program.
A bond’s zero volatility spread tells the investor the present value of the bond plus its cash flows at specific points on the Treasury curve where cash flows are generated.
The Bank Note Swap Rate (BBSW) is a short-term interest rate used as a benchmark for valuing Australian dollar derivatives and securities, primarily floating rate bonds.
A basis point is a standard measure of interest rates and other percentages in finance.
– One basis point is equal to 1/100th of 1%, or 0.01% (and 0.0001 in decimal).