Riding the Yield Curve

The interest rate rate spread between bid and ask for bonds is directly connected to the commodity prices. When the commodity prices move up the bid is narrowed and ask increased.

Padmanabhan, the value of the bond can fluctuate in two different ways. When the demand for the bond goes up it naturally pulls down it's yield because as the number of investors seeking a pariticular bond goes up the trader can keep raising the price of the bond. This probably. happen in some markets.
In some cases they raise the retail interest rates as the demand rise which happens in interest rate options like a raise for each trade will be in the units of 1 "tick" and a tick is 1/8th of a basis point or 4/32 ie; 4 "seconds" makes one tick.

Thanks all, I shall also give the method of valuation of bonds.
If a bond 15%, 10year maturity then the present value of the bond is = 15/(1+0.15)+15/(1+0.15)^2+......+15/(1+0.15)^15. If the rate changes from 15 to 14 then the value of the bond changes which is got as above changing 0.15 to 0.14 in the denominator. This is for normal bonds.

Excellent  work thanks Mathew sir keep posting like stuff,
Yes, riding the yield curve is employed to make capital gains by using the yield curve, taking advantage of the direct relationship between yield and maturity. Instead of buying and holding a short maturity security a longer maturity one is bought and sold accordingly. The downside is interest rate risk, as especially the maturity is higher and they make better returns only when the long term rates are higher than short term rates.

 Mathew,Very interesting GK. Thanks for sharing.

Nice article Mr. Mathew, really very informative. Thanks for sharing...