The yield curve of national debt is the benchmark of bond pricing and the most important analytical tool for bond investors. It helps to understand the long-term and short-term supply-demand relationship in the national debt market, reveals the overall level and development of the market interest rate, and provides an important basis for the government to issue national debt, strengthen management, and formulate and implement monetary policy. Therefore, it is of great significance to construct a reasonable yield curve of national debt.
The yield curve has two characteristics: first, it reflects the relationship between interest rate and term in the market; The second is to integrate the prices of all varieties (or representative varieties) in the market, thus reflecting the overall interest rate level of the market. Because the price of national debt is negatively correlated with interest rate, the yield curve of national debt is a "barometer" of the national debt market.
The bond yield curve is closely related to the bond futures: first, the bond yield curve is one of the important foundations of bond futures trading, because the bond yield curve is the "wind vane" of the bond spot market interest rate level; Second, treasury bond futures are conducive to improving the treasury bond yield curve, introducing the discovery mechanism of forward interest rate for the treasury bond yield curve, changing the one-way mode that the bond market can only make profits if it rises, and promoting the rational pricing of bonds and establishing a more reasonable yield curve.