what does key rate duration tell you 
key rate duration is an important concept in estimating the expected changes in value for a bond or portfolio of bonds because it does so when the yield curve shifts in a manner that is not perfectly parallel which occurs often effective duration another important bond metric is an insightful duration measure that also calculates expected changes in price for a bond or portfolio of bonds given a 1 change in yield but it is only valid for parallel shifts in the yield curve this is why the key rate duration is such a valuable metric key rate duration and effective duration are related there are 11 maturities along the treasury spot rate curve and a key rate duration may be calculated for each the sum of all the 11 key rate durations along the portfolio s yield curve equal the effective duration of the portfolio example of how to use the key rate durationit can be difficult to interpret an individual key rate duration because it is very unlikely that a single point on the treasury yield curve will have an upwards or downwards shift at a single point while all others remain constant it s useful for looking at key rate durations across the curve and looking at the relative values of key rate durations between two securities for example assume bond x has a one year key rate duration of 0 5 and a five year key rate duration of 0 9 bond y has a key rate durations of 1 2 and 0 3 for these maturity points respectively it could be said that bond x is half as sensitive as bond y on the short term end of the curve while bond y is one third as sensitive to interest rate changes on the intermediate part of the curve 