Trade bonds with City Index

The main mover of bond markets is interest rates. Interest rates impact the value of bonds heavily, even though the instalments paid back to the bond buyer never actually change.

If interest rates are high and the interest rate of the bond is significantly lower, it’s going to make buying that bond less attractive to investors. If interest rates are lower than bond rates, buying a bond look more profitable for investors.

Before you invest in bonds, you’ll want to make sure you fully understand how the bond market works, and the key information for your chosen investment – including its coupon rate, when it matures and its credit rating.

It’s also worth checking current interest rates, and guidance on where rates might head next, to ensure that your bond is a good investment. Remember, bonds involve lending your capital to a government or company until a set date that may be in the long-term future – so it’s worth doing your homework now.

With City Index, you can trade on bond prices over the short term instead of investing in them directly. Learn more about how bond trading works.

There are two main types of bonds: corporate and government. As the names suggest, corporate bonds are sold by companies and government bonds are sold by countries. There are other categories – such as municipal bonds and agency bonds – but these are the most common.

In general, corporate bonds are seen as the riskier option as it is more likely that a company will default on its loans than a country. However, government bonds can also be risky, so it’s always worth checking the credit rating of the market you’re planning on trading.