Definition ∞ The bond market is a financial marketplace where participants buy and sell debt securities, primarily issued by governments, municipalities, and corporations. These securities represent a loan made by an investor to a borrower, with a promise of regular interest payments and repayment of the principal amount. It serves as a crucial mechanism for public and private entities to secure funding. The market size and activity reflect prevailing interest rates and economic expectations.
Context ∞ The performance of the traditional bond market remains a critical economic indicator, often influencing investor behavior across all asset classes, including digital assets. Fluctuations in bond yields and credit spreads are closely observed for their implications on risk appetite and capital allocation decisions. Central bank monetary policy adjustments, such as interest rate changes or quantitative easing, significantly impact bond valuations and subsequently shape broader financial market sentiment.
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