Fixed Income & Rates
Bonds, yields, and the interest-rate environment that prices them.
Bonds look simple until rates move, and this topic explains both halves of the equation.
It covers the mechanics of fixed income first: how a bond pays, yield to maturity, duration and the price sensitivity it measures, and the credit ratings that price default risk.
Then it connects those instruments to the rate environment that drives them, from the policy rate set by the central bank to the shape of the yield curve.
Investing With Purpose keeps the focus on what actually changes a bond's value, so a rate headline becomes something you can act on.
Read it to understand income, safety, and the single biggest risk most bondholders underestimate.
Start here
A bond is a loan packaged as a tradable security. The buyer lends money to the issuer, and the issuer promises to pay…
Yield to maturity is the single discount rate that equates a bond's future cash flows to its current price, assuming…
Modified duration is the percentage price change a bond will experience for a small change in its yield. It is the…
The federal funds rate is the overnight interest rate at which US banks lend reserve balances to each other. It is the…
The yield curve is the line you get when you plot US Treasury yields against their maturities, from 1-month bills out…
A credit rating is a letter grade that summarizes an agency's opinion of how likely a bond issuer is to default on its…
More in Fixed Income & Rates
Gross Domestic Product is the headline number for the size of a country's economy. It measures the market value of all…
Inflation is a sustained rise in the general price level of goods and services. Three official U.S. indexes measure it…
An interest rate is the price of money over time. If you borrow, it is the rate you pay. If you lend or save, it is the…
The Federal Reserve is the central bank of the United States. It sets monetary policy, supervises banks, and manages…
The business cycle is the recurring pattern of expansion and contraction in aggregate economic activity. Understanding…
The coupon rate is the fixed interest payment a bond promises. The yield is the actual return a buyer earns given the…
Current yield is a bond's annual coupon income divided by its current market price. It is the simplest yield measure in…
Investment grade and high yield are the two halves of the corporate bond market, split at the BBB- / Baa3 threshold.…
US Treasury securities are debt obligations of the federal government, split into three maturity buckets: bills (one…
TIPS are US Treasury securities whose principal adjusts up and down with the Consumer Price Index. They pay a fixed…
Municipal bonds, or munis, are debt securities issued by states, cities, counties, and related agencies to finance…
A bond ladder is a portfolio of individual bonds with maturities staggered at regular intervals. As each rung matures,…
A barbell splits your bond holdings between short and long maturities and avoids the middle. A bullet concentrates…
Accrued interest is the interest a bond has earned since its last coupon payment but has not yet paid out. When you buy…
The Federal Open Market Committee (FOMC) is the body inside the Federal Reserve that actually votes on US monetary…
US Treasury yields are the interest rates the federal government pays to borrow across the maturity spectrum. They are…
The **nominal rate** is the headline interest rate you see quoted. The **real rate** is what is left after you strip…
**Quantitative easing (QE)** is when a central bank buys large quantities of long-dated bonds to push down long-term…
Each month the Bureau of Labor Statistics publishes the **Employment Situation** report, covering the unemployment rate…
The **Purchasing Managers' Index (PMI)** is a monthly survey of supply-chain executives that tracks whether business…
**Initial jobless claims** count the number of people who filed a new unemployment-insurance claim during the prior…
Consumer sentiment surveys translate how American households feel about their finances and the broader economy into a…
A credit spread is the extra yield a corporate bond pays over a Treasury of the same maturity. It is the market's price…
The Cboe Volatility Index, better known as the VIX, measures the market's expectation of 30-day forward volatility on…