Important Information

You are visiting the international Vantage Markets website, distinct from the website operated by Vantage Global Prime LLP
( ) which is regulated by the Financial Conduct Authority ("FCA").

This website is managed by Vantage Markets' international entities, and it's important to emphasise that they are not subject to regulation by the FCA in the UK. Therefore, you must understand that you will not have the FCA’s protection when investing through this website – for example:

  • You will not be guaranteed Negative Balance Protection
  • You will not be protected by FCA’s leverage restrictions
  • You will not have the right to settle disputes via the Financial Ombudsman Service (FOS)
  • You will not be protected by Financial Services Compensation Scheme (FSCS)
  • Any monies deposited will not be afforded the protection required under the FCA Client Assets Sourcebook. The level of protection for your funds will be determined by the regulations of the relevant local regulator.

If you would like to proceed and visit this website, you acknowledge and confirm the following:

  • 1.The website is owned by Vantage Markets' international entities and not by Vantage Global Prime LLP, which is regulated by the FCA.
  • 2.Vantage Global Limited, or any of the Vantage Markets international entities, are neither based in the UK nor licensed by the FCA.
  • 3.You are accessing the website at your own initiative and have not been solicited by Vantage Global Limited in any way.
  • 4.Investing through this website does not grant you the protections provided by the FCA.
  • 5.Should you choose to invest through this website or with any of the international Vantage Markets entities, you will be subject to the rules and regulations of the relevant international regulatory authorities, not the FCA.

Vantage wants to make it clear that we are duly licensed and authorised to offer the services and financial derivative products listed on our website. Individuals accessing this website and registering a trading account do so entirely of their own volition and without prior solicitation.

By confirming your decision to proceed with entering the website, you hereby affirm that this decision was solely initiated by you, and no solicitation has been made by any Vantage entity.

I confirm my intention to proceed and enter this website Please direct me to the website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom

By providing your email and proceeding to create an account on this website, you acknowledge that you will be opening an account with Vantage Global Limited, regulated by the Vanuatu Financial Services Commission (VFSC), and not the UK Financial Conduct Authority (FCA).

    Please tick all to proceed

  • Please tick the checkbox to proceed
  • Please tick the checkbox to proceed
Proceed Please direct me to website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom.


Rediscover Your Trading Potential

Watch Reborn a Trader


View More
  • All
  • Search
  • Forex Trading
  • Vantage Rewards
  • Spreads
  • facebook
  • instagram
  • twitter
  • linkedin
  • youtube
What is Bond Market 


What is Bond Market 

What is Bond Market 

Vantage Updated Updated Wed, 2024 January 31 10:45

The bond market, also called the debt market or credit market, is an online marketplace where people trade bonds. These bonds can be issued by governments or corporate companies to raise funds for projects or company expansions. 

Read on to learn more about the bond market, its background and the different kinds of bonds available to help you understand bonds better.

What is the Bond Market

The bond market is a place where people buy and sell bonds, which are like IOUs issued by governments and companies to get money. When you buy a bond, you lend out your money for a certain period of time, in return for regular interest payouts. The issuer of the bond also returns the initial amount you invested (the principal) when the bond reaches its maturity date.

The maturity date plays a significant role in bonds. When a bond takes longer to mature, it becomes more sensitive to changes in interest rates. This sensitivity is measured by a concept called duration, which indicates the bond’s price responsiveness to movements in interest rates.

To help you understand this better, here’s an example [1]:

Investor A has purchased a bond with a duration of 5 years. Over the course of those 5 years, if the interest rates in the economy go up by 1% each year, the new bonds will become a more attractive option as they offer a better return. The value of the current bond will become less valuable (due to the lower old interest rate), and the price of that bond will decrease as a result of the constant increase in interest rates.

The same can be said if the interest rates in the economy are reduced by 1% each year, and the new bonds will become less attractive as the old bonds offer a better return (due to the higher interest rate that is offered previously). This relationship between duration and interest rate changes enables investors to assess how fluctuations in interest rates can potentially impact the value of a bond.

History of Bond Markets

Bonds have a considerably longer trading history compared to stocks. As far back as ancient Mesopotamia, there were loans that could be assigned or transferred to different individuals. These loans were measured in units of grain weight and allowed debtors to exchange them with one another. The history of debt instruments can be traced back to 2400 B.C. through the discovery of a clay tablet in Nippur [2]. This tablet contains a guarantee for the payment of grain and outlines the repercussions if the debt was not repaid.

Over time, the bond market evolved and expanded as economies grew and financial systems developed. Governments became significant issuers of bonds to finance wars and infrastructure projects. Companies also began issuing bonds to raise capital for business expansion or to fund new ventures. 

As the bond market grew, it became more sophisticated, with standardised terms and trading platforms emerging to facilitate the buying and selling of these bonds.

bond market

Types of Bond Markets

There are two types of bond markets: the primary market and the secondary market.

The primary bond market serves as the initial platform for the issuance of new bonds. In this market, various entities such as governments, corporations, and other organisations sell bonds with the aim of raising funds. Investors have the opportunity to purchase these newly issued bonds directly from the issuer, establishing a direct link between the borrower and lender.

On the other hand, the secondary bond market is where previously issued bonds are traded between investors. This market provides liquidity to bondholders who want to sell their bonds before they mature. It also allows new investors to buy bonds that are already in circulation. The secondary bond market is typically more active and dynamic compared to the primary market.

Advantages of Bond Markets 

There are several advantages that come with investing in the bond market:

Steady Income [3]

Bonds provide investors with regular interest payments, which can be appealing to those seeking a stable income stream. Additionally, at bond maturity, the principal will be repaid in full, unless there is a default.

Lower Risk 

Government bonds are often considered low-risk investments due to the stability of national economies [4] as governments usually have a track record of honouring their debt obligations, making government bonds a relatively secure investment option.

Examples of government bonds include: US Treasury Notes(T-Note), Japan government bond, UK Gilts (British Government Bonds) and Australian Government Bonds.

Diverse Selection

The bond market offers a wide range of options to cater to different investor preferences. Investors can choose from bonds with varying maturities, which determine the length of time until the bond’s full repayment. Yields, or interest rates, can also differ among bonds, providing investors with the opportunity to select bonds that align with their desired investing strategy.

Disadvantages of Bond Markets

There are also some disadvantages:

Interest Rate Risk

Bond prices move in the opposite direction of interest rates. When interest rates rise, bond prices fall, and vice versa. This poses a risk to bond investors, especially if they need to sell their bonds before maturity. When interest rates rise significantly, the value of bonds will decline, and if sold before maturity, this may result in potential losses.

Credit Risk 

Bonds are essentially debt instruments issued by governments, municipalities, or corporations. There is always a risk that the issuer may default on interest payments or fail to repay the principal amount at maturity. This credit risk varies across different bonds based on the issuer’s financial health and credit rating.

Liquidity Risk 

Some bonds may lack liquidity, indicating a limited market for buying or selling them. Investors may face difficulties when attempting to sell their bonds quickly. In order to sell their bonds quickly, investors may have to even sell them at a lower price, which can result in potential losses.

Bond Market vs Stock Market

While both the bond market and stock market are part of the financial ecosystem, they also differ in several ways. Here is a table comparing their differences:

AspectStock MarketBond Market
OwnershipInvestors become partial owners of the company through stock ownershipBonds represent a debt owed by the issuer to the investor
Income vs. Capital AppreciationPotential for capital appreciation and dividendsRegular income through interest payments
Market DynamicsDriven by market sentiment and company performanceInfluenced by interest rates, credit ratings, and economic conditions
LiquidityGenerally higher liquidity, with stocks traded frequently on exchangesBonds may have lower liquidity and trade less frequently
Investment HorizonStocks are often considered long-term investmentsBonds can have varying maturities, offering options for short-term or long-term investments

Table 1: Difference between the bond market and the stock market.

How to Trade Bonds

There are a plethora of channels and options one can choose from to begin investing in bonds, including:

1. Online broker

Many online broker firms offer access to bond markets, allowing you to buy and sell bonds directly. For example, you can open a live account with Vantage and begin trading bonds via Contracts for Difference (CFDs) with us. Access a wide range of bond CFDs through our user-friendly platform, which enables you to conveniently monitor and execute your trades.

This includes Euro-Bund Futures, US 10 YR T-Note Futures Decimalised and UK Long Gilt Futures.

2. Bond Exchange-Traded Funds (ETFs) or Mutual Funds

Another option available is to invest in bond mutual funds or ETFs. These investment vehicles offer a convenient way for you to gain exposure to a diverse range of bonds. Experienced professionals manage these funds and have specialised knowledge in selecting bonds and constructing portfolios. They conduct thorough research and analysis to carefully choose a mix of bonds that align with the fund’s investment goals and strategies.

Learn more about the differences between ETFs and mutual funds by visiting Vantage Academy.

3. Bond Dealers

Bond dealers are financial institutions that specialise in buying and selling bonds. They act as intermediaries between bond issuers and investors. By working with a bond dealer, you can access a wide range of bonds and receive guidance on bond selection and trading strategies. Bond dealers can also provide insights on market trends and help you navigate the bond market effectively.


The bond market plays a vital role for bond issuers and also an opportunity for investors that are looking to invest in them. While bonds offer advantages such as steady income and diverse investment options, there are also risks to consider, including interest rate risk and credit risk.
Ready to start trading bonds CFDs? Open a live account with Vantage now and begin trading bond CFDs. With bond CFDs, traders can take advantage of bond price movements in all directions without owning the underlying assets.


  1. “What is bond duration? – BlackRock” Accessed 5 July 2023
  2. “The Bond Market (aka Debt Market): Everything You Need to Know – Investopedia” Accessed 5 July 2023
  3. “What Is Fixed Income? – Investopedia” Accessed 5 July 2023
  4. “Government Bond: What It Is, Types, Pros and Cons – Investopedia” Accessed 5 July 2023
  • vantage academy open account

    Open Trading Account

    Discover the endless trading possibilities with our cutting-edge platform, designed to empower both beginners and seasoned traders alike.

  • vantage academy app

    Download Vantage App

    Trade on the go with the Vantage All-In-One Trading App, where smooth execution and market access come together in the palm of your hand.

  • vantage academy start trading

    Start Trading

    Are you an existing user? Login to your account to start trading 1,000+ products including forex, indices, gold, shares and more.