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The good thing is that the secondary market for government bonds and notes is very competitive, and this is makes the prices for actively traded bonds and notes the same in the market, even globally.
Quotes On Government Bonds And Notes:
If you see a quote, it will usually have five headings for each note and bond. These headings will most probably be as follows:
ISSUE BID ASK CHANGE YIELD
6 1/2 8/15/05-N 105.08 12 +3 5.57
Under “issue” you can see 6.5 percent. That refers to the interest rate set by the US Treasury when the issue was first sold. The next figure, 8/15/05, refers to the maturity date, and “N” shows that the issue is a note and not a bond. This means that the maturity date will be anything from 2 years to 10 years. Bonds have maturity dates more than 10 years.
Under the heading “bid”, you can see the price a buyer has to pay to purchase the issue; while “ask” refers to the price a seller will sell the issue for. Both these figures are a sort of numerical shorthand that informs the investor or seller of the buy and sell prices. Ask prices for bonds and notes are usually higher than bid prices.
Quotes on government bonds and notes are in dollars and fractions of a dollar. The usual fraction used by government bonds and notes is 1/32. So, if you see a bid price 105.08, it means $105 plus 8/32 of a dollar.
Under “ask” in the example above, 12 refers to 12/32 of the dollar price. That means that the seller wants $105 and 12/32 which equals to $105.375 for each $100 face value.
“Change” refers to the difference between the current trading day’s bid price and the preceding trading day’s bid price. This is also a shorthand numerical value, and in the example above the change is 3/32 or 9 cents per $100 face value.
“Yield” refers to annual percentage return that a buyer will get if he purchases the note or bond on the day of the quote. In our example, it is 5.57 percent and the buyer will receive this percentage until the note matures.
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