QUICK DEFINITION
Current Yield is a bond's annual coupon payment divided by its current market price.
WHY IT MATTERS
Why Current Yield matters in bond markets
Current yield is simple but ignores capital gains or losses from the bond moving toward par and therefore differs from yield to maturity.
MARKET CONTEXT
How to think about it
Bond investors use current yield 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 Current Yield important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Current yield is simple but ignores capital gains or losses from the bond moving toward par and therefore differs from yield to maturity.