Overview
An introduction to government bonds, yield curves, and how they're used in financial markets
What Are Government Bonds?
Government bonds are debt securities issued by national governments to finance public spending. When you buy a government bond, you're lending money to the government in exchange for:
Regular interest payments (called coupons)
Return of principal at maturity
Government bonds are considered among the safest investments because they're backed by the full faith and credit of the issuing government.
Common Names by Country
United States
Treasuries (T-Bills, T-Notes, T-Bonds)
USD
United Kingdom
Gilts
GBP
Germany
Bunds
EUR
France
OATs
EUR
Japan
JGBs (Japanese Government Bonds)
JPY
Australia
AGBs (Australian Government Bonds)
AUD
What Is a Bond Yield?
A bond's yield represents the return an investor receives for holding the bond. There are several types of yields:
Coupon Rate vs Yield
Coupon Rate
The fixed interest rate paid annually (set at issuance)
Current Yield
Annual coupon ÷ Current market price
Yield to Maturity (YTM)
Total return if held to maturity, accounting for price, coupon, and time
Example: A bond with a 3% coupon trading at 95 (below par) will have a yield higher than 3%, because you're buying at a discount.
Price and Yield Move Inversely
This inverse relationship is fundamental to understanding bond markets.
What Is a Yield Curve?
A yield curve plots bond yields across different maturities at a single point in time. It shows the term structure of interest rates.
Example: US Treasury Yield Curve
Yield Curve Shapes
Normal
Upward sloping
Economic growth expected; investors demand higher yields for longer-term risk
Flat
Horizontal
Uncertainty; transition period
Inverted
Downward sloping
Potential recession; short-term rates exceed long-term rates
Steep
Sharply upward
Strong growth expectations or central bank easing
Why Are Government Bond Yields Important?
1. Risk-Free Rate Benchmark
Government bonds (especially US Treasuries and German Bunds) are used as the risk-free rate in financial models:
Discounting cash flows in DCF valuations
Pricing derivatives and other instruments
Setting base rates for corporate bond spreads
2. Credit Spread Reference
Corporate bonds are priced as a spread over government bonds:
Example: If the 10Y Treasury yields 4.2% and a corporate bond yields 5.7%, the credit spread is 150 basis points (1.5%).
3. Swap Spread Analysis
The difference between swap rates and government bond yields reveals market conditions:
2Y
2.30%
2.19%
+11 bps
5Y
2.58%
2.50%
+8 bps
10Y
2.90%
2.90%
0 bps
4. Economic Indicator
Central banks and economists monitor yield curves to gauge:
Inflation expectations
Growth outlook
Monetary policy effectiveness
Spot Yields vs Forward-Starting Yields
Spot Yields
The yield on a bond starting today and maturing at a future date.
Example: The 10Y spot yield is the yield on a bond purchased today, maturing in 10 years.
Forward-Starting Yields
The implied yield on a bond starting at a future date.
Example: The "5Y yield, 2Y forward" is the market-implied yield for a 5-year bond starting in 2 years.
Forward-starting yields are useful for:
Planning future financing
Analyzing rate expectations
Pricing forward-starting instruments
Key Terminology
Par Value
The face value of the bond (typically 100)
Coupon
The periodic interest payment
Maturity
When the principal is repaid
Duration
Sensitivity of price to yield changes
Basis Point (bp)
0.01% (1/100th of a percent)
Zero-Coupon Yield
Yield on a bond with no coupons (pure discount)
Benchmark Bond
The most liquid bond at a given maturity (e.g., "on-the-run" Treasuries)
Government Bonds in BlueGamma
BlueGamma provides government bond yields for multiple countries:
🇺🇸 United States
US Treasuries
🇬🇧 United Kingdom
UK Gilts
🇩🇪 Germany
German Bunds
🇫🇷 France
French OATs
🇮🇹 Italy
Italian BTPs
🇪🇸 Spain
Spanish Bonos
🇯🇵 Japan
JGBs
🇦🇺 Australia
Australian Government Bonds
🇨🇦 Canada
Canadian Government Bonds
🇳🇱 Netherlands
Dutch DSLs
🇧🇷 Brazil
Brazilian Government Bonds
🇰🇷 South Korea
Korean Treasury Bonds
🇮🇳 India
Indian Government Bonds
🇮🇩 Indonesia
Indonesian Government Bonds
🇵🇱 Poland
Polish Government Bonds
🇬🇷 Greece
Greek Government Bonds
🇫🇮 Finland
Finnish Government Bonds
🇩🇰 Denmark
Danish Government Bonds
Next Steps
Accessing Bond Yields — How to view yields in the BlueGamma app
Accessing Forward Starting Bond Yields — Get forward-starting yield curves
Fetching a Government Bond Curve (API) — Retrieve yields programmatically
FAQs — Common questions about government bond data
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