Bond yield

A bond pays a fixed coupon and repays a face value on a stated date. Its yield expresses what those payments are worth to somebody buying at today's price. Current yield is the annual coupon divided by the market price. Yield to maturity is the fuller measure, the single discount rate at which the present value of every remaining payment equals the price paid, so it folds in the gain or loss between the purchase price and the face value repaid at redemption.

Because the coupon is fixed in money terms, price and yield move in opposite directions by construction. A higher price means the same stream of payments costs more, so the return on them is lower. This is why a headline reporting that yields rose is describing a fall in the bond market, which reverses the intuition most readers bring from equities and is the single most common misreading of the phrase.

Government bond yields are read as the market's collective view of policy rates, inflation and credit standing over a horizon, which is why they move currencies and equity valuations rather than staying inside their own market. The differential between two countries' yields is one of the standard reference points for a currency pair. The trip-up is comparing yields across countries without noticing that they are quoted on different day count and compounding conventions, and that a nominal yield and a yield adjusted for expected inflation are different numbers wearing the same name.