What Is Bond Convexity?
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Convexity is the curvature: duration’s linear guess understates gains when yields fall and overstates losses when yields rise (for vanilla bonds).
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What Is Bond Convexity — the mechanics
Investors like positive convexity. It is why a duration-matched barbell can behave differently from a bullet. Callable bonds can have negative convexity — government bullets generally do not.
Duration is a straight-line guess. Convexity is the curve: for an option-free government bond, prices rise a bit more than duration says when yields fall, and fall a bit less when yields rise.
Long, low-coupon bonds have more convexity. That is worth something when volatility is high. It is not a free lunch; you pay for it in yield.
Callable corporates can have negative convexity. The G7 government lines on this site are the vanilla case.
Official sources (International guides)
Primary statistics and prospectuses for International guides are published by the issuer, not by this newsroom. The labelled links at the end of this page go to those official sites (DMO, TreasuryDirect, Finanzagentur, MEF, AFT, SNB or ECB as relevant).
Our live board is a teaching overlay: dated prints, named sources, estimated ISIN lines. It is not a replacement for the issuer’s calendar.
Főbb tanulságok
- Duration is a straight-line guess.
- Prices and yields change. When this site quotes them, it dates them on the live board.
- Credit of a G7 government in its own currency is not the same as a stable screen price, and not the same as a bank deposit.
GYIK
- Do I need convexity as a beginner?
- Not on day one. Learn duration first. Convexity matters more for large yield moves and for barbell versus bullet design.