Bond Market
Introduction to Bond Market
A financial market place where debt instruments, primarily bonds, are bought and sold is called a bond market. The dealings in a bond market are limited to a small group of participants. Contrary to stock or commodities trading, the bond market (also known as the debt market) lacks a central exchange.
The bond market (also known as the credit, or fixed income market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the Secondary market, usually in the form of bonds. The primary goal of the bond market is to provide a mechanism for long term funding of public and private expenditures.
Much like people, large organizations such as corporations, the federal government, and state and local governments all need to borrow money occasionally. Unlike you and me, it is awfully difficult for these organizations to get as much money as they need just with the promise to repay it the next day. Instead, they have to agree not only to pay back the amount they borrowed, but also to pay a little extra in the form of a fee (interest) for the privilege of borrowing the money.
Types of bond markets
The Securities Industry and Financial Markets Association (SIFMA) classifies the broader bond market into four specific bond markets.
The federal government. U.S. government bonds are called Treasuries because they are sold by the Treasury Department. Treasuries come in a variety of different "maturities," or lengths of time until maturity, ranging from three months to 30 years. Various types of Treasuries include Treasury notes, Treasury bills, Treasury bonds, and inflation-indexed notes. These all vary based on maturity and amount of interest paid
Other government agencies. Some government agencies and quasi-government agencies like the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corp.
A financial market place where debt instruments, primarily bonds, are bought and sold is called a bond market. The dealings in a bond market are limited to a small group of participants. Contrary to stock or commodities trading, the bond market (also known as the debt market) lacks a central exchange.
The bond market (also known as the credit, or fixed income market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the Secondary market, usually in the form of bonds. The primary goal of the bond market is to provide a mechanism for long term funding of public and private expenditures.
Much like people, large organizations such as corporations, the federal government, and state and local governments all need to borrow money occasionally. Unlike you and me, it is awfully difficult for these organizations to get as much money as they need just with the promise to repay it the next day. Instead, they have to agree not only to pay back the amount they borrowed, but also to pay a little extra in the form of a fee (interest) for the privilege of borrowing the money.
Types of bond markets
The Securities Industry and Financial Markets Association (SIFMA) classifies the broader bond market into four specific bond markets.
The federal government. U.S. government bonds are called Treasuries because they are sold by the Treasury Department. Treasuries come in a variety of different "maturities," or lengths of time until maturity, ranging from three months to 30 years. Various types of Treasuries include Treasury notes, Treasury bills, Treasury bonds, and inflation-indexed notes. These all vary based on maturity and amount of interest paid
Other government agencies. Some government agencies and quasi-government agencies like the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corp.