The 10-year Treasury yield is the annual return investors earn for lending to the U.S. government for ten years. It is probably the most closely watched interest rate in the world. Mortgage lenders, corporate treasurers, stock analysts and central banks all keep an eye on it, because it summarizes what markets think about growth, inflation and interest rates over the next decade.
You can see the latest official value, its history and how it compares with other maturities on our 10-year Treasury yield page.
Why ten years?
Short-term Treasury rates are tied closely to Federal Reserve policy. Very long rates, such as the 30-year, are shaped by distant, uncertain expectations. Ten years sits in between: long enough to reflect the economic outlook rather than the next Fed meeting, and short enough to trade in enormous volume. The 10-year note is also one of the most actively traded securities in the world, which makes its yield a reliable, continuously updated reference.
What the 10-year yield is made of
Economists often break the 10-year yield into two parts:
- Expected short-term rates. The average short-term interest rate markets expect over the next ten years. If investors expect the Fed to keep rates high for a long time, this part is higher.
- The term premium. Extra compensation for the risk of holding a ten-year security instead of rolling over short-term ones, including the risk that inflation or rates turn out higher than expected.
Neither part can be observed directly; they are estimated with economic models. But the idea helps explain why the 10-year can rise even when the Fed is cutting rates, or fall when it is raising them.
How the 10-year affects everyday finances
Mortgage rates
Rates on 30-year fixed mortgages tend to move with the 10-year yield, because most mortgages are paid off or refinanced well before 30 years. Lenders add a spread on top, and that spread changes over time, so mortgage rates and the 10-year don’t move in lockstep.
Other loans and bonds
Corporate bonds and many long-term loans are priced as a spread over Treasury yields of similar maturity, so when the 10-year rises, borrowing costs elsewhere often follow.
Stocks and other assets
Investors compare expected returns on stocks and property with the “risk-free” return on Treasuries. A higher 10-year yield raises that bar, which can weigh on asset prices; a lower one can support them.
What makes it move day to day
- Inflation reports and inflation expectations
- Employment and growth data
- Federal Reserve statements about the future path of rates
- The size of Treasury auctions and demand for them
- Global events that send investors toward or away from safe assets
The 10-year and the yield curve
Comparing the 10-year with shorter maturities tells you about the yield curve’s shape. The difference between the 10-year and the 2-year, and between the 10-year and the 3-month, are the two most quoted measures. When either turns negative, that part of the curve is inverted. You can chart these spreads back to 1990 with the Treasury Spread Calculator.
Common misunderstandings
- “The 10-year yield is set by the Fed.” No. The Fed sets a short-term policy rate. The 10-year is set by market trading, though expectations about Fed policy influence it.
- “A higher yield is good for bondholders.” For people buying new bonds, a higher yield means more income. For people who already own bonds, rising yields mean falling prices.
- “The 10-year yield on the news is what I’ll earn.” Headline figures are often intraday yields on a specific note. The yield you lock in depends on the price you pay.