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Government bonds are debt securities issued by a government to support government spending and obligations. In some cases, they offer a low-risk investment option for individuals and institutions.
These bonds are crucial for funding public projects and services, ensuring economic stability and growth by providing governments with a reliable source of financing.
Investing in Government Bonds helps diversify portfolios, offering predictable returns and contributing to the overall stability of financial markets.
Government bond yields vary due to changes in interest rates, inflation expectations, and economic conditions. When interest rates rise, bond prices fall, causing yields to increase. Additionally, during periods of economic uncertainty, investors flock to government bonds, driving prices up and yields down.
These yield variations significantly impact both savers and states. For savers, higher yields mean better returns on investments but can also result in higher borrowing costs. For states, lower yields reduce the cost of financing debt, making it easier to manage public budgets. Conversely, higher yields increase borrowing costs, putting pressure on government finances.
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