What Is Bond Yield?
The return an investor earns on a bond, expressed as a percentage of its price.
The Full Definition
Bond yield is the return a bond generates, expressed as a percentage — and it moves inversely to bond price. When bond prices fall, yields rise (the same fixed interest payment represents a bigger percentage of a lower price), and vice versa. The most commonly cited yield is the 10-year US Treasury yield, which serves as a benchmark for mortgage rates, corporate borrowing costs, and how attractive bonds look relative to stocks. Rising yields can pressure stock valuations, since investors can earn more from "safe" bonds without taking equity risk.
Real-World Example
If a $1,000 bond paying $40 a year in interest drops in price to $800, its yield rises from 4% to 5% — the bond didn't change, but its return relative to what you'd now pay for it did.