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Bond Market News
Bond Investing Primer – Learn the Basics of Bond Investing
May 23, 2025
How do bonds work?
Bonds are conceptually similar to loans where the investor (you) is the lender and the bond issuer (corporate, bank, govt) is the borrower. The bond issuer will promise to pay you interest (aka coupons) at regular intervals and return your principal at maturity.
Why invest in bonds?
Bonds form an integral part of all investment portfolios, offering the following benefits:
- Predictable income generation: Receive fixed coupons at regular intervals
- Capital preservation: Receive your principal back at maturity
- Diversification: Bonds have historically had a negative correlation to stocks, making them a good hedge in times of stock market volatility
- Capital appreciation: Bond prices move inversely to interest rates – when interest rates go down (as they are expected to in 2025), bond prices go up
What should be my allocation to bonds?
As with all asset classes, allocation depends on your risk appetite, return expectations and income needs. The general rule of thumb followed by many investors is – your age should be your allocation to bonds. Below are some sample stock/bond portfolios for you to decide what is most suitable for you.
Is now a good time to invest in bonds?
Since late-2024, the Fed has cut its policy Fed Funds Rate by 100bp (1%), currently standing at 4.33%. With the current backdrop of tariffs, its impact on economic growth and rising geopolitical tensions, global uncertainty has been on the rise. Traders are today anticipating about 75bp (0.75%) in further Fed rate cuts through end-2025. This bodes well for bonds, given the inverse relationship between rates and bond prices.
Key bond terms to know (no boring definitions!):
- Principal: The amount you get back at maturity
- Coupon: Your regular interest payout
- Maturity: The date you get your money back
- Yield: Your actual annualized return based on the bond’s current price
- Price vs Yield: If a bond price goes up, its yield goes down (and vice versa)
- Duration: Tells you how much a bond’s price will change with interest rates
- Credit Rating: A score that tells you how likely the issuer is to pay you back
(AAA: most likely – CCC: least likely)
What returns can I expect if I start investing in bonds today?
US Treasuries (bonds issued by the US govt) are the most popular bonds, with billions of dollars’ worth of bonds bought and sold by individual and institutional investors every day.
| Maturity | Yield |
| 1-month | 4.29% |
| 6-months | 4.30% |
| 1 year | 4.13% |
| 5 years | 4.09% |
| 10 years | 4.53% |
Source: BondbloX | Data as of 23 May 2025
US Treasuries are considered risk-free instruments. Investors looking for a higher yield can consider corporate or bank bonds. Here’s a sample list of corporate and bank bonds with current yield levels:
| Bond | Price | Yield |
| Apple 1.400% 2028 | 92.0 | 4.1% |
| Saudi 4.750% 2028 | 100.5 | 4.5% |
| Netflix 5.375% 2029 | 103.4 | 4.5% |
| Emirates NBD 5.875% 2028 | 104.1 | 4.6% |
| HSBC 4.950% 2030 | 100.3 | 4.9% |
| DPW 3.750% 2030 | 95.0 | 4.9% |
| Tata Steel 5.450% 2028 | 100.7 | 5.2% |
| Ford 6.625% 2028 | 103.1 | 5.6% |
| Turkey 5.250% 2030 | 93.9 | 6.7% |
| Pemex 5.350% 2028 | 93.5 | 8.0% |
Source: BondbloX | Data as of 23 May 2025
How to buy bonds on BondbloX?
You can get started by downloading the BondbloX mobile app and completing your digital onboarding (10-15 mins). Once done, you are all set to buy your first bond with as little as $1,000.
For more information on BondbloX, see the FAQs
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