Why price and yield move in opposite directions
A conventional bond promises fixed payments on fixed dates. Those payments do not change, so the only way the market can reprice the security is by changing what someone pays for that fixed stream. Pay less for the same coupons and the return you earn is higher; pay more and it is lower.
That is the whole of the inverse relationship, and it is arithmetic rather than sentiment. When yields rise, existing bonds fall in price because their fixed coupons are now less attractive than newly issued ones. Nothing about the issuer needs to have changed for that to happen.
Duration is sensitivity, measured in years
Duration is the weighted average time until a bond's cash flows arrive, and it doubles as the sensitivity of price to yield: a bond with a duration of seven falls roughly seven percent if yields rise one percentage point. It is an approximation that holds well for small moves and degrades for large ones, which is what convexity corrects.
The practical consequence is that two bonds from the same issuer can behave completely differently. A two-year and a thirty-year bond carry identical credit risk and radically different interest-rate risk, and confusing the two is the most common error in describing what a bond "does".
Where the confusion usually starts"Safe" applied to a bond usually means low credit risk: the issuer will pay. It says nothing about price stability. A thirty-year government bond has almost no credit risk and can lose a large fraction of its value if yields rise, which is not a contradiction but two separate risks with one adjective.
What a credit spread compensates for
A corporate bond yields more than a government bond of the same maturity, and the difference is the spread. It compensates for the possibility of default, for the expected loss if default happens, and for the liquidity of the instrument. When spreads widen, the market is charging more for those risks; when they narrow, less.
Spreads are the most watched signal in credit precisely because they move before accounting does. A widening spread is the market repricing the same fixed schedule of payments, and it happens on information rather than on filings.
Why an equity reader should care
Government bond yields are the discount rate against which every other asset is implicitly judged. When that rate rises, the present value of distant cash flows falls, which affects long-duration equities more than short-duration ones: the same duration arithmetic, applied to a business rather than a coupon.
It also sets the cost of borrowing for the companies being screened. A business with floating-rate debt or a near-term maturity is directly exposed to where this market prices, which is exactly the link between reading a debt schedule and reading a yield curve. That connection is mechanical, and it is the reason this page sits in a screening section.