What it is
The bond market, also known as the debt market or credit market, is where entities issue and trade debt instruments. When an investor buys a bond, they are essentially lending money to the issuer in exchange for regular interest payments (coupon payments) and the return of the principal at maturity. Bonds are issued by governments (like Treasury bonds), municipalities, and corporations, each carrying different levels of risk and offering varying yields.
The bond market is crucial for understanding the cost of borrowing, interest rate expectations, and risk appetite in the economy. Bond prices and yields move inversely: when demand for bonds rises, prices increase and yields fall. Central banks, like the Federal Reserve, heavily influence the bond market through their monetary policy decisions, such as interest rate changes and quantitative easing or tightening. News often covers movements in Treasury yields as indicators of economic health and future Fed actions.
Why it matters
The bond market impacts everything from mortgage rates to corporate borrowing costs, influencing economic growth and providing insights into future interest rate changes.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice