Bond Market Statistics

In this article, we take a structured and more numbers-driven survey of the bond market: its early history, scale/size, strategies or uses, and key statistical trends.

Key sources for this article include FRED (Federal Reserve research), SIFMA, BIS, Pew Research Center, Trading Economics, icmagroup.org, and OECD.

Key Takeaways – Bond Market Statistics

• Bonds evolved from early state loans in ancient China and Renaissance Italy to organized sovereign markets in 17th-century Europe.
• Global bond market value now exceeds $150 trillion, larger than global equities.
• Global debt hit $337 trillion, keeping bond issuance strong.
• The global bond market is roughly 25-30% larger than the global equity market.
• The US holds about 40% of global bonds. China is the second largest.
• Typical yield on the 10-year US Treasury averages around 4.25-4.5%, peaking at 15.8% (1981) and bottoming near 0.3% (2020).
• Corporate bonds make up roughly one-third of all outstanding debt; sovereigns dominate the rest.
• Bonds provide financing, income, diversification, and risk management for many market participants globally.
  • Pensions: ~36% in bonds (steady over the past 20 years).
  • Sovereign wealth funds: ~28%, trending lower.
  • Hedge funds: heavy fixed-income exposure via leverage and derivatives.

Early History & Evolution

Origins & Early Use

Before formal bond markets emerged, debt was a personal or localized affair. Medieval rulers and city-states borrowed directly from wealthy merchants, religious orders, or trading guilds.

Tax revenues or trade rights were often pledged as collateral.

In ancient China, formal bond markets didn’t exist, but early debt instruments did.

As early as the Zhou (1046 – 256 BCE) and Han (206 BCE – 220 CE) dynasties, which we covered more here, private lending and government-issued promissory notes circulated. 

By the Tang (618 – 907 CE) and Song (960 – 1279 CE) periods, paper credit certificates resembled proto-bonds, which facilitated state finance and merchant trade.

In Renaissance Italy, cities like Venice and Florence created early versions of state loans known as prestiti, where citizens were compelled to lend to the government and received regular interest.

These instruments were transferable, hinting at what would later become a secondary market.

By the 16th century, Spanish and Genoese financiers were underwriting royal debts. This set the stage for the broader, organized bond markets of Europe’s 17th century.

Early Sovereign Debt Markets (17th Century)

The modern bond concept traces to sovereign debt in Europe.

As early as the 17th century, governments (e.g., in the Netherlands, England) issued debt obligations to finance wars or public works.

One of the earliest examples: the Dutch Republic in the 17th century used perpetual bonds (“renten”) to fund its wars and infrastructure.

Through the 18th and 19th centuries, sovereign bonds and government loans were an important instrument for financing state budgets, especially during wars when spending ballooned (Napoleonic Wars, colonial expansions).

Related: The Past 500 Years of History & Implications for Today’s Portfolios

19th & Early 20th Century Growth

The development of railroads, industrial firms, and municipal infrastructure drove the growth of corporate and municipal bonds in the 19th century, particularly in the US and Britain.

By the early 20th century, large corporations and municipalities in the US routinely issued bonds to fund capital investment (railroads, utilities, water, etc.).

Post-World War Era & Innovations

After WWII, government debt, especially in Europe and Japan, grew as reconstruction and welfare states expanded.

In the later 20th century (1970s–2000), we saw financial innovation: mortgage-backed securities (MBS), asset-backed securities (ABS), inflation-protected securities, high yield (junk) bonds, credit default swaps tied to bonds, and catastrophe bonds (cat bonds).

For example, MBS and ABS allowed debt based on underlying cash flows (mortgages, credit card receivables, auto loans).

Catastrophe bonds now support insurance/insurer risk transfer; by end-2024, the outstanding cat bond market was over $45 billion with issuance of ~$15.4 billion in 2023.

The first “Samurai bond” (yen-denominated bond issued in Japan by a foreign entity) was in November 1970 (¥6 billion, 7-year maturity).

The Eurobond market (bonds issued in a currency not native to the issuer) also took off in the mid-20th century, becoming a large international segment. According to BIS, the international bond market (Eurobonds etc.) has had a growing role in global capital flows. For more info, this is a great resource.

Over time, emerging markets developed local bond markets (e.g., China’s interbank bond market launched in 1997).

Scale, Size, and Structure

Global Scale & Growth

As of 2025, the global fixed-income (debt securities) market was estimated at over $150 trillion (all types of bonds and debt securities).

Long-term fixed income issuance globally commonly runs at over $20 trillion per year.

The global bond (debt securities) market is larger than the global equity market by many estimates.

According to the SIX-Group, in 2024 the global bond market was valued at $141.3 trillion, with the US alone holding ~51 trillion (≈40% of the total).

Composition: Sovereign / Corporate / Other

• According to ICMA (as of August 2020), the global bond market had ~$128.3 trillion in outstanding notional value: ~$87.5 trillion in SSA (sovereign, supranational, agencies) and ~$40.9 trillion in corporate bonds (≈32%).
  
  • In the SSA segment, sovereign bonds were ~73% (~$63.7 trillion).
    
  • In corporate bonds, 53% were issued by financial institutions.
    
• In 2024, US long-term fixed-income issuance was broken down as:
  • US Treasuries: $4.7 trillion
  • Mortgage-backed securities (MBS): $1.6 trillion
  • Corporate bonds: $2.0 trillion
  • Federal agency securities: $1.3 trillion
  • Municipal bonds: $513.6 billion
  • Asset-backed securities (ABS): $388.1 billion (Source: SIFMA)
    
• US Treasury market trading volume: average daily volume ~$1,071.8 billion (as of the same period).
  
• On the sovereign side, OECD reports that at end of 2023, global sovereign + corporate bond debt was ~$100 trillion, with corporate debt ~$34 trillion. (Source: OECD)

Regional / Country Highlights

• The US is the largest bond market single country: in 2024, the US fixed-income market was $58.2 trillion, or 40.1% of the global total. (Source: Pew Research Center)
  
• China’s interbank bond market (CIBM), established in 1997, and grew to $21.5 trillion (outstanding) as of 2022, making it the second-largest domestic bond market.
  
• Among global corporate issuers, the US and China together account for a large share (in ICMA data, ~ 45 % of the corporate market).
  

Yields, Returns & Market Behavior

Yield Trends & Interest Rate Regimes

In the US, the 10-year Treasury yield (a benchmark) has varied greatly.

Historically, the US 10-year yield peaked ~15.82% in September 1981. That high came amid very high inflation and Fed tightening in the early 1980s.

During the COVID-19 panic in 2020, the 10-year yield fell to ~0.32% in certain intraday/constant maturity measures.

Estimating a true “long-term average” is tricky, because yields fluctuate a lot over different regimes. But here are benchmark values:

• YCharts lists a “long term average” of 4.25 % for the 10-year yield.
• The 10-year yield has averaged around 4.5 % over long spans (200+ years, with inflation cycles, etc.)
• This 4-4.5% figure is used as a benchmark “typical” yield in normal (non-extreme) environments.

Thus, a fair working “historical average” for many modern analyses is in the 4.2%-4.5% band.

Long-term bond yields in the US declined from ~15% in 1981 down to ~6% by 2000. This secular bull for bond prices (falling yields) drove strong returns for long bonds.

Corporate bond spot rates: for example, the 20-year high-quality corporate bond spot rate is around 5.81%. (Source: FRED)

Returns Over Long Horizons

Historical return data (1928–2025) from NYU Stern show bonds (and bills) giving steady returns, albeit lower than equities over long-term horizons. (Source: Stern School of Business)

• In the 20th century, equities outperformed bonds by a large margin. But note: bond returns tend to be lower volatility and less “upside.”

Market Volatility & Crises

The 1994 Bond Market Crisis was known as the “Great Bond Massacre.”

In 1994, rising interest rates (the US Fed raising rates several times) led to a widespread sell-off. Bonds globally lost $1.5 trillion in value, $1 trillion of that from US debt.

Global bonds lost around 6% of market value, while US bonds fell roughly 9% in 1994.

During periods of rising yields or inflation surprises, long-duration bonds suffer more (price falls more steeply).

Credit spread widening (when risk premium demanded by investors increases) can sharply affect high-yield / lower-rated corporate bonds more than sovereigns.

Strategies, Uses, and Market Roles

Roles & Uses

• Financing – Governments issue bonds to fund deficits, infrastructure, and public spending. Corporations issue bonds to fund capital expenditures, acquisitions, or capital structure optimization.
  
• Risk management / Matching Liabilities – Pensions, insurers, and asset managers use bonds to match liabilities (duration matching) because cash flows can be timed.
  
• Diversification & Income – In portfolios, bonds provide income (coupon payments) and act as a diversifier relative to equities. In times of equity stress, bond allocation can help stabilize returns. Nonetheless, rising interest rate regimes complicate that role because that can hit the present value of both asset classes.
  
• Monetary & Fiscal Role – Central banks often operate in the bond market (buying/selling government debt, yield curve control). Governments may adjust issuance strategy to influence yield curve, debt structure.
  

Strategic Dimensions & Approaches

A few strategic dimensions of bond markets:

• Duration / Interest Rate Strategy – Traders choose bond maturity exposures to position for rate changes (steepening, flattening). For example, in a falling rate regime, longer-duration bonds can yield higher capital gains.
  
• Credit Spread / Credit Strategy – In corporate bond investing, one takes views on credit risk and spread movement (i.e., how much extra yield over risk-free). Skilled managers seek to pick bonds where spread tightening is expected.
  
• Curve Strategies – Using different points on the yield curve (e.g., barbell, bullet, ladder) to optimize risk vs return.
  
• Relative Value / Arbitrage – Using mispricing among bonds, between sovereign vs. corporate, between durations, or between bonds and derivatives (e.g., futures, swaps) to exploit small yield differentials.
  
• Securitization / Structure – Using structured products (MBS, ABS, CDOs) to reallocate risk (credit, prepayment, cash flow sequencing).
  
• ESG / Green / Social Bond Strategies – Recently, “green bonds,” “social bonds,” “sustainability bonds” (GSS) have grown. By end 2024, cumulative GSS+ issuance reached $6.9 trillion (with ~$5.7 trillion, or 83%, as recognized GSS+). (Source: Climate Bonds)
  

Key Trends & Statistics to Watch

Rising Debt Levels

Global debt (not just bond markets) recently reached record levels ($337.7 trillion as of mid-2025, per IIF). This puts upward pressure on bond issuance and yields.

Issuance Volatility

In 2024, global long-term fixed income issuance increased 26% year-over-year to $10.4 trillion, according to SIFMA.

Investor Flows

Bond fund inflows hit record ~$600 billion in 2024, reflecting investor expectations of easing monetary policy. (Source: Financial Times)

Growth Rates

Some sectors (corporate bonds, securitized products) grow faster than sovereigns.

The corporate bond market has seen strong five-year CAGRs. (Source: LSEG)

Interest Rate Sensitivity

In rising rate regimes, bond performance across maturities is differentiated – short-duration bonds may outperform.

Default Risk / Credit Stress

Credit cycles matter: during recessions, corporate bond defaults, and downgrades surge, hurting returns.

Regulation & Market Structure

Transparency, centralized clearing, electronic trading, and regulatory capital rules have reshaped liquidity, bid-ask spreads, and market resilience.

Emerging Markets & Local Currency Bonds

As more emerging economies develop domestic bond markets, foreign investor access, currency risk, and local yield curves become more relevant.

Bonds in Pensions Funds, Sovereign Wealth Funds, and Hedge Funds

Here’s a numbers-first look at how bonds show up in big pools of money, and how that mix has shifted.

Pension funds

Across the world’s big pension markets, bonds have sat near a third of portfolios for two decades. 

The global average bond allocation was 36% in 2023, the same 36% as in 2003. 

The big change hasn’t been toward more bonds, it’s been the steady rise of alternatives, funded mainly by trimming both equities and bonds. (Source: https://investors.wtwco.com/news-releases/news-release-details/global-pension-assets-rebound-past-usd-55-trillion)

Two useful details behind the headline:

• Pensions have diversified their bond geography.
  • More countries have become viable and tend to have higher yields than the US, especially emerging markets.
• The share of domestic bonds inside total bond sleeves fell from ~81% (2003) to ~72% (2023), as funds bought more foreign debt.
  
• Many large plans now run equity, bond, and alternatives in tight bands, adjusting gradually with age or liabilities. For example, Japan’s GPIF keeps a four-way split across domestic/foreign stocks and bonds, with about 50% in bonds overall under its current policy.

The US public-plan story is similar at a higher level of detail: since 2001–2023, plans reallocated ~20 percentage points away from public equity and fixed income toward private markets, not specifically away from bonds alone. (Source: NIRS)

Sovereign wealth funds (SWFs)

Most SWFs run more equity and private-market risk than pensions, with a smaller bond sleeve.

Recent survey data put fixed income at ~28% of SWF assets, with equities ~32%, and the balance in private markets and other assets.

The trend since 2010 has been down in bonds, up in private markets, though not uniformly across funds. (Source: TheCityUK)

You can see this in single-fund disclosures. Singapore’s GIC reported fixed income at 26% in its latest breakdown, alongside a majority equity allocation.

Individual funds vary, but the broad direction matches the survey trend.

Hedge funds

Hedge funds don’t report “portfolio weights” the way pensions or SWFs do, because they use shorting and derivatives.

Two ways to frame bond exposure:

1. By strategy mix: relative-value and credit strategies tied to fixed income are a large slice of industry AUM. One recent overview pegs relative-value at ~27% of AUM, reflecting meaningful bond-linked activity. (Source: Callan)
   
2. By gross exposures (long + short), which better capture leverage. Global regulators’ 2022 look-through shows hedge funds’ long exposure to sovereign bonds $2.29 trillion and to corporate bonds ~$0.30 trillion. There are also sizable positions in reverse repo and interest-rate derivatives, which are bond-adjacent risk. Netting shorts changes the picture, but the scale underscores how central fixed income is to many hedge fund books.

Regulators also note that UST exposures have been elevated at times, even if below pandemic peaks, again highlighting the bond market’s central role for hedge funds. (Source: Federal Reserve)

What’s changed

• Pensions – Bond share steady near mid-30s% for 20 years, with more foreign bonds and more alternatives over time.
  
• SWFs – Bond share lower, about the high-20s%, and declining over the last decade as private assets grow.
  
• Hedge funds – There’s no simple “bond % of portfolio,” but large fixed-income exposures by strategy and by gross notional, with sovereign-bond longs above $2 trillion in the latest global snapshot.