Why bond yields are central to financial markets

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Bond yields are one of the most important reference points in global financial markets. Changes in yields influence borrowing costs, asset valuations, capital flows and investor sentiment across nearly all asset classes. For this reason, movements in bond yields often trigger broad market reactions.

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Unlike stock prices, which reflect company-specific factors, bond yields represent the cost of money and the market’s expectations about inflation, growth and monetary policy. When yields move, they signal shifts in the underlying economic and financial environment.

 

This section explains why bond yields move markets and why they are closely monitored by investors, central banks and policymakers.