Bond yield is the actual return you earn on a bond at its current market price. If a bond with $1,000 face value and 5% coupon ($50 annually) trades at $900, the current yield is 5.56% ($50 ÷ $900). Yield moves inversely to price — when bond prices fall, yields rise, and vice versa.
Key yield measures: current yield (coupon ÷ price) — simplest; yield to maturity (YTM) — total return if held to maturity, including capital gains/losses; and yield to call (YTC) — return if the bond is called early. YTM is the most comprehensive and widely used measure.
The 10-year US Treasury yield is the most important number in global finance. It influences mortgage rates, corporate bond pricing, stock valuations, and currency values worldwide. When this yield crossed 5% in October 2023 (first time since 2007), it sent shockwaves through global markets. India's 10-year G-Sec yield (around 7%) serves a similar benchmark role domestically.