QUICK DEFINITION
Bid-Ask Spread is the difference between the highest price a buyer will pay and the lowest price a seller will accept.
WHY IT MATTERS
Why Bid-Ask Spread matters in bond markets
A wider spread usually signals lower liquidity or higher uncertainty and raises the cost of trading.
MARKET CONTEXT
How to think about it
Bond investors use bid-ask spread as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Bid-Ask Spread important for fixed-income investors?
← Back to the Bond Market Glossary Yes. A wider spread usually signals lower liquidity or higher uncertainty and raises the cost of trading.