Theory of economics

Bond yields. The bond market is thought to be a good leading indicator, but it is important to note that the entire market is just based on investors’ and traders’ expectations of future economic circumstances. So, perhaps rather than it being considered a leading indicator of what the economy will do, it is a gauge of market expectations.

Find out what government bonds are the best way to use bonds is by looking at the yield curve. A bond’s yield is the income that a trader can expect to receive in return for buying and holding a bond. The yield curve is a line plotted on a chart that shows the yields of bonds with equal credit quality but differing maturity dates – the graph should, in theory, slope upward, as the yields are higher for bonds with longer maturities.