The price of risk-free money · the base for valuing every asset. When it rises, it presses on growth.
The short answer
- What is the Treasury yield (Treasury Yield)?
- Treasury yield: yield to maturity for terms from 3 months to 30 years.
- When is Treasury Yield wrong?
- It responds to expectations, not to reality. It moves before the data. You can see it on live market data on the "Rates and yields page". Open the rates and yields page →
Indicator limit
It responds to expectations, not to reality. It moves before the data.
Read it with
Federal funds rate: the gap between it and the federal rate shows what the market prices in next.
Answers: how is the economy doing?
What it measures
The US Treasury yield is what US government debt pays an investor each year. It is quoted for terms from one month to thirty years. The 10-year yield is the best-known benchmark: mortgage rates, corporate loans and stock valuations are built on it.
The inverse relationship between price and yield
A bond pays a fixed coupon, so if its market price falls, the effective yield for a new buyer rises, and the reverse. That is why "yields rising" means bond prices are falling, that is, investors are selling them. Mixing up the two directions is the most common mistake for someone starting to read the debt market.
Why it is the discount rate for stocks
In theory, a stock is worth its future earnings discounted to today, and the risk-free yield is the base of the discount rate. So a rise shrinks the present value of all future earnings, and growth stocks are hit hardest because their earnings fall years out. This explains why tech drops when yields jump.
Read the causes, not the numbers
A rise in yields is not one thing. If it comes from stronger expected growth, it is healthy and stocks may rise with it. If it comes from accelerating inflation or worry about debt supply, it weighs on every asset. The cause decides the effect, which is why yields are read alongside inflation and growth data, not alone.
Hypothetical example
The 10-year yield jumps 20 basis points in a week. If it comes with higher growth expectations and rising cyclical stocks, the story is healthy. If it comes with stocks falling broadly and a rising dollar, the story is financial tightening that presses on everything.
Read it with
Read it with the Yield Curve Spread, which shows what the debt market expects for growth and rates, with Treasury auction results, which reveal the appetite of demand, and with the Consumer Price Index.
Where to see it on the platform
The macro dashboard plots yields and their curve, and the Treasury flows dashboard shows the results of the auctions that move them.
