What is Yield Sensitivity?

Yield sensitivity, or interest rate sensitivity, is a measurement of how much the price of a fixed-income asset will fluctuate as a result of changes in the interest rate. Generally, securities and other asset types that are more yield-sensitive have greater price fluctuations than those with less yield sensitivity. Yield sensitivity should be taken into consideration when selecting a fixed-income asset that an investor may sell on the secondary market. Yield sensitivity always affects both the buying and selling of an asset, and interest rates and fixed-income asset prices are inversely correlated.