governmentbond

Government bonds are debt securities issued by a national government to borrow money. They promise to pay the holder a fixed or variable rate of interest (the coupon) at regular intervals and to repay the principal at maturity. They are generally considered among the least risky investments because the issuer can raise taxes or print money to meet obligations, though risk varies by country and currency.

Common forms include treasury bills (short-term, up to one year, typically issued at a discount to face value), notes or bonds (longer maturities, with semiannual coupon payments). Inflation-linked variants exist (for example inflation-indexed bonds such as TIPS in the United States or index-linked gilts in the UK).

Issuance occurs mainly through auctions in the primary market; afterwards, they trade on secondary markets with prices driven by changes in interest rates, expectations of inflation, and supply/demand. Yields move inversely to prices. They are used as benchmarks and as tools for monetary policy by central banks.

Risks include credit risk, which is typically low for stable economies but not zero; price sensitivity to changes in interest rates and inflation; and currency risk for non-domestic buyers. Returns are usually modest and linked to prevailing policy rates and inflation expectations.

Examples include United States Treasury securities (Bills, Notes, Bonds, and TIPS), UK Government Bonds (Gilts), German Federal Bonds (Bunds), and Japanese government bonds (JGBs). Government bonds are a core component of many investment portfolios and national financial systems.