Bond Market
The global marketplace where debt securities are issued, bought, and sold, encompassing government, corporate, and other fixed-income instruments.
What is Bond Market?
The bond market (also called the fixed-income market or debt market) is the global marketplace where governments, corporations, municipalities, and other entities issue and trade debt securities to raise capital. The primary market is where new bonds are issued through underwritten offerings or auctions; the secondary market is where previously issued bonds are traded between investors. The global bond market is substantially larger than equity markets—estimated at over $100 trillion—and is dominated by government bonds, followed by corporate bonds, mortgage-backed securities, and municipal bonds. Bond market activity is a key input to central bank policy, as yields reflect market expectations for growth, inflation, and interest rates.
Example
When the U.S. Treasury holds its weekly T-bill auction and monthly note and bond auctions, it is issuing securities in the primary bond market. When institutional investors subsequently trade those bonds through broker-dealers and electronic trading platforms, that is the secondary bond market at work. The 10-year Treasury yield from this secondary market is the most widely followed benchmark in global finance.