The yield on a government bond is the interest rate that a government pays for the amounts of money it borrows, by issuing the bonds, from the market. Government bonds, especially those issued by creditworthy governments, are safe, therefore tend to produce a lower yield, given their lower credit risk which is reflected in a lower risk premium (investors do not demand a high rate of interest for lending to the government).

Bond yields usually change with supply and demand in a given market. If demand for a government bond is high, a government does not attempt to attract more investors, but it can keep its yield or interest rate levels fairly low.