When do yields fall

The yield on the year Treasury bond slid more than 5 basis points lower to 2. Yields move inversely to prices and 1 basis point is equal to 0. The year rate topped 1. YTM is a yield calculation that enables you to compare bonds with different maturities and coupons. The yield's relationship with price can be summarized as follows: When price goes up, yield goes down and vice versa.

Technically you'd say the bond's prices and its yield are inversely related. Here's a main point of confusion. How can high yields and high prices both be good when they can't happen at the same time? The answer depends on your point of view. If you're a bond buyer, you want high yields. On the other hand, if you already own a bond, you've locked in your interest rate, so you hope the price of the bond goes up.

This way you can cash out by selling your bond in the future. The face value, coupon, maturity, the issuer and yield are all factors that play a role in a bond's price. However, the factor that influences a bond more than any other is the level of prevailing interest rates in the economy.

When interest rates rise, the prices of bonds in the market fall , thereby raising the yield of the older bonds and bringing them into line with the newer bonds being issued with a higher coupon. And, when interest rates fall, the prices of bonds in the market rise , thereby lowering the yield of the older bonds and bringing them into line with the newer bonds being issued with a lower coupon. Read tip - How bonds work. The two-year yield, which hit a session high of 0.

The five-year yield, another part of the curve that is sensitive to Fed rate expectations, jumped as high as 1. It was last 5 basis points lower at 1. Nonfarm payrolls increased by , jobs last month, according to the U. Labor Department, which also revised September data higher to show , jobs created instead of the previously reported , You may change your billing preferences at any time in the Customer Center or call Customer Service. You will be notified in advance of any changes in rate or terms.

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