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u.s. tbonds, page-8

  1. 2,739 Posts.
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    A general query regarding the 10 year treasury/bond yield - I'd appreciate some help please.

    Please correct me if I'm wrong - I'm trying to join some dots, as I could only find sketchy details on the internet.

    All I know is the 10 year bond yield curve is the price of 10 year treasuries/bonds on the secondary market (second hand market) at given points in time.

    I'm assuming the 10 year bonds were originally issued some time ago - maybe years ago - at a set/fixed coupon rate.
    Let's say the coupon rate was 1.5%.

    Some of these bonds were presumably then traded on the secondary market - and are subject to buying and selling and ongoing risk assessment by investors - the result of which is a varying yield (despite the fact the bonds were originally issued/auctioned at a fixed coupon rate - and if held to maturity - i.e., not sold into the secondary market - would have delivered the fixed rate throughout the tenure).

    Am I right so far?

    As the bonds (on the secondary market) near maturity, does the the yield curve change to reflect that?

    If the US government issued a new batch of 10 year treasury bonds - would they need to be issued at a coupon rate close to the 10 year bond yield rate, to attract investors?
    What is the significance of the yield curve?

    thank you in advance.












 
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