The Dynamics of Bond Price Volatility and Yield Curve Movements

Xingcheng Xu

doi:10.54254/2754-1169/2025.GL26992

Advances in Economics, Management and Political SciencesOpen access

The Dynamics of Bond Price Volatility and Yield Curve Movements

Research Article

Open Access

The Dynamics of Bond Price Volatility and Yield Curve Movements

Xingcheng Xu ^1*

¹ Boston University

^*Corresponding author: xudaniel72@gmail.com

Published on 16 September 2025

AEMPS Vol.216

ISSN (Print): 2754-1177

ISSN (Online): 2754-1169

ISBN (Print): 978-1-80590-359-8

ISBN (Online): 978-1-80590-360-4

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Abstract

The study of bond prices and yield curves is crucial in modern financial markets, as bonds play a significant role in the global economy. Recent market volatility, driven by economic uncertainties and changing interest rate environments, underscores the need for a comprehensive analysis of how yield curve changes impact bond prices. This paper reviews the relationship between the bond price and the change in the yield curves. It explains the basic pricing models and the role of the yield curve, then discusses key drivers of price changes, including interest rate shifts, inflation expectations, and investor sentiment. By using the bond price calculation formula, the analysis shows that yield curve movements influence bond prices through changes in discount rates, while investor behavior and policy expectations can also have various effects on the curve. Lastly, it ends with implications for policymakers and investors, notes the study’s limitations, and provides some suggestions for future research.

Keywords:

Duration, convexity, discount rate, bond price, yield curve

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References

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[9]. Shiller, R. J. (2000). The long-run returns to equity and bonds. *Journal of Finance, 55(4), 1273-1302.

[10]. Krishnamurthy, A., & Vissing-Jorgensen, A. (2012). The aggregate demand for Treasury debt. Journal of Political Economy, 120(2), 233–267. https: //doi.org/10.1086/666526

References

[1]. Fabozzi, F. J. (2012). Bond markets, analysis, and strategies (8th ed.). Pearson.

[2]. Campbell, J. Y., & Viceira, L. M. (2002). Strategic asset allocation: Portfolio choice for long-term investors. Oxford University Press.

[5]. Hull, J. (2018). Options, Futures, and Other Derivatives (10th ed.). Upper Saddle River, NJ: Pearson Education

[6]. Modigliani, F., & Sutch, R. (1966). Innovations in interest rate policy. The American Economic Review, 56(1/2), 178–197. https: //www.jstor.org/stable/1821299

[9]. Shiller, R. J. (2000). The long-run returns to equity and bonds. *Journal of Finance, 55(4), 1273-1302.

[10]. Krishnamurthy, A., & Vissing-Jorgensen, A. (2012). The aggregate demand for Treasury debt. Journal of Political Economy, 120(2), 233–267. https: //doi.org/10.1086/666526

Cite this article

Xu,X. (2025). The Dynamics of Bond Price Volatility and Yield Curve Movements. Advances in Economics, Management and Political Sciences,216,39-43.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of ICFTBA 2025 Symposium: Financial Framework's Role in Economics and Management of Human-Centered Development

ISBN: 978-1-80590-359-8(Print) / 978-1-80590-360-4(Online)

Editor: Lukáš Vartiak, Habil. Florian Marcel Nuţă

Conference website: https://2025.icftba.org/Galati.html

Conference date: 17 October 2025

Series: Advances in Economics, Management and Political Sciences

Volume number: Vol.216

ISSN: 2754-1169(Print) / 2754-1177(Online)

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