▁of ▁its ▁size ▁and ▁liquid ity . ▁Government ▁b onds ▁are ▁often ▁used ▁to ▁compare ▁other ▁b onds ▁to ▁measure ▁credit ▁risk . ▁Because ▁of ▁the ▁inverse ▁relationship ▁between ▁bond ▁valu ation ▁and ▁interest ▁rates ▁( or ▁yields ), ▁the ▁bond ▁market ▁is ▁often ▁used ▁to ▁indicate ▁changes ▁in ▁interest ▁rates ▁or ▁the ▁shape ▁of ▁the ▁yield ▁curve , ▁the ▁measure ▁of ▁" cost ▁of ▁fund ing ". ▁ ▁The ▁yield ▁on ▁government ▁b onds ▁in ▁low ▁risk ▁countries ▁such ▁as ▁the ▁United ▁States ▁or ▁Germany ▁is ▁thought ▁to ▁indicate ▁a ▁risk - free ▁rate ▁of ▁default . ▁Other ▁b onds ▁denomin ated ▁in ▁the ▁same ▁curr encies ▁( U . S . ▁D oll ars ▁or ▁Eu ros ) ▁will ▁typically ▁have ▁higher ▁yields , ▁in ▁large ▁part ▁because ▁other ▁borrow ers ▁are ▁more ▁likely ▁than ▁the ▁U . S . ▁or ▁German ▁Central ▁Govern ments ▁to ▁default , ▁and ▁the ▁losses ▁to ▁invest ors ▁in ▁the ▁case ▁of ▁default ▁are ▁expected ▁to ▁be ▁higher . ▁ ▁The ▁primary ▁way ▁to ▁default ▁is ▁to ▁not ▁pay ▁in ▁full ▁or ▁not ▁pay ▁on ▁time . ▁ ▁Types ▁The ▁Sec ur ities ▁Indust ry ▁and ▁Fin an cial ▁Mark ets ▁Association ▁( SI F MA ) ▁class ifies ▁the ▁bro ader ▁bond ▁market ▁into ▁five ▁specific ▁bond ▁mark ets . ▁ ▁Corpor ate ▁Government ▁and ▁ag ency ▁Municipal ▁Mort g age - back ed , ▁asset - back ed , ▁and ▁coll ater al ized ▁deb t ▁oblig ations ▁Fund ing ▁ ▁Part icip