Bond Market Fundamentals
Bonds are loans you make to governments or corporations in exchange for regular interest payments and the return of your principal. These articles cover the basics — how bonds are issued, priced, and traded, what coupon rates and maturities mean, and why bonds behave differently from stocks in your portfolio.
Yield Spreads and Benchmark Selection
Master yield spread analysis and benchmark selection to optimize bond portfolio risk-adjusted returns.
Primary Issuance vs. Secondary Trading Workflows
Where you buy bonds—primary issuance or secondary market—affects pricing by 0.5-2%, a difference that compounds over a portfolio's lifetime.
Reading Bond Quotes and Price Conventions
Misreading a bond quote by confusing clean and dirty price costs $15-25 per $1,000 face value—the accrued interest you forgot to account for.
What Is a Bond? Coupons, Par, and Accrued Interest
Understanding bond mechanics—coupons, par value, and accrued interest—determines whether you pay the right price for fixed income.
Understanding Bond Indentures and Covenants
Covenant erosion since 2015 reduced bondholder recovery rates by 15-20 cents on the dollar—the fine print that determines whether you're a creditor or a casualty.
Odd-Lot Trading and Liquidity Considerations
Odd-lot trading introduces liquidity friction in fixed income markets; understanding execution dynamics and pricing impacts is critical for optimizing bond transactions.
Day-Count Conventions and Settlement Cycles
Using the wrong day-count convention creates $2-5 per $1,000 calculation errors—small individually, material across a portfolio.
What Is a Bond? Coupons, Par, and Accrued Interest
Master bond mechanics—coupons, par, and accrued interest—to optimize yield while managing risk in fixed income portfolios.
Treasury vs. Corporate vs. Agency Markets Overview
The 100-150 bps corporate spread over Treasuries compensates for default risk—but only 20-30 bps of that spread is actual expected loss, the rest is liquidity and risk premium.
Coupon Types: Fixed, Floating, and Step-Up
Coupon structures determine bond cash flows and risk. Choosing between fixed, floating, and step-up coupons aligns portfolios with rate expectations and risk tolerance.
Treasury vs. Corporate vs. Agency Markets Overview
Understanding the risk-return profiles and liquidity dynamics of Treasury, corporate, and agency bonds is critical for fixed income portfolio construction and risk management.
How Credit Ratings Are Assigned at Issuance
Credit ratings at issuance anchor bond valuations and risk assessments. Master their mechanics to refine security selection and pricing intuition.
Who Trades Bonds? Dealers, Platforms, and Investors
Retail investors pay 0.5-1.5% more in transaction costs than institutions—the market structure tax on small positions.
Coupon Types: Fixed, Floating, and Step-Up
Choosing the wrong coupon structure in a rising rate environment cost fixed-rate holders 15-20% in 2022—floaters lost less than 1%.
Callable, Putable, and Convertible Bonds
Embedded options transfer risk between issuers and investors—understanding who holds the option determines whether you're compensated or exploited.
How Credit Ratings Are Assigned at Issuance
Rating agencies predicted only 40% of 2008 defaults within 12 months—the lag that makes ratings a starting point, not a conclusion.
ETF Share Creation Impact on Bonds
Bond ETF investors routinely trade tens of thousands of times per day on exchanges while the underlying bonds they represent might change hands 37 times each. That liquidity gap—over 90,000 seconda...
Clean Price vs. Dirty Price Distinctions
Every bond trade involves two prices—the one you see quoted and the one you actually pay. The difference is accrued interest, and misunderstanding it leads to settlement surprises, miscalculated yi...
Checklist for Evaluating a New Bond Issue
New bond issues hit the market at a relentless pace—over $2.0 trillion in U.S. corporate bonds were issued in 2024 alone, up 30.6% year-over-year (SIFMA). With that volume comes pressure to act fas...
Bond Math Basics: Price/Yield Relationship
When interest rates rise, your bond portfolio drops in value—sometimes sharply. In 2022, the Bloomberg U.S. Aggregate Bond Index fell approximately 15.7% as the Federal Reserve hiked rates by 375 b...