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How do government bond yields work?
Why does the rising price of a bond pushes it's yield down? The bond price and its yield are linked; if one goes up, the other must go down. This is because the cash flows from the bond are fixed, predetermined. The market price of the bond fluctuates. Now what if people are suddenly willing to pay more for the same fixed payments? It must mean that the return, i.e. the yield, will be lower. Here we see that risk associated with the bonds in question has   skyrocketed, and thus bonds' returns has skyrocketed, too. Am I right? The default risk has increased, yes. Now, I assume that bonds' price is determined by the market (issued by   a state, traded at the market). Is that correct? Correct, as long as you are talking about the market price. Then who determines bonds' yields? I mean, isn't it fixed? Or - in the   FT quote above - they are talking about the yields for the new bonds   issued that particular month? The yield is not fixed - the cash flows are. Yield is the internal rate of return. See my answer above to your first question.