QUICK DEFINITION
Duration is a measure of a bond's sensitivity to changes in interest rates and, in its Macaulay form, the weighted timing of cash flows.
WHY IT MATTERS
Why Duration matters in bond markets
Duration is the central fixed-income measure for estimating how much a bond price may change when yields move.
MARKET CONTEXT
How to think about it
Bond investors use duration 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 Duration important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Duration is the central fixed-income measure for estimating how much a bond price may change when yields move.