A Treasury yield is the price of lending to the US government for a set time, and it changes every business day as investors trade. The forces behind it differ by maturity. Bill yields stay close to the Federal Reserve's policy rate, as the guide to how Fed rate decisions affect T-bill rates shows, while 10- and 30-year yields also price inflation, a real return and a premium for tying money up. This page takes each force in turn, with dated examples from 2023 to 2026 and a live table of real yields and breakeven inflation. What these moves do to the price of a note you own is covered in why bond prices fall when rates rise, and the US Treasuries hub explains the securities themselves.
What is a Treasury yield made of?
A Treasury yield is the average short-term rate investors expect over its life plus a term premium; split another way, it is a real yield plus compensation for inflation. Both splits describe the same number.
Neither split can be read straight off a screen. The first needs a model, because no market quotes expected rates and the term premium separately; the most cited is the New York Fed's ACM model, named after economists Tobias Adrian, Richard Crump and Emanuel Moench. The second uses market prices of Treasury Inflation-Protected Securities, but the breakeven it produces also carries an inflation risk premium and the effect of TIPS trading less actively than regular Treasuries.
Maturity decides which part dominates. A 2-year yield is mostly the expected path of Fed policy over two years, so it jumps on surprises about the next few meetings. A 30-year yield is mostly a judgment about inflation, growth and risk over three decades, and the Fed's next move barely registers in it.
How does Fed policy move longer yields?
Through expectations: a 10-year yield embeds the average short rate expected over the decade, so a Fed move shifts it only as far as it changes that path. A cut that investors already expected moves it little; a cut that convinces them inflation will run hotter later can even push it up.
Worked example: A full point of cuts and a higher 10-year yield, 2024 to 2025
- The Fed lowered its target range by 0.50 point on September 18, 2024 and by 0.25 point on November 7 and December 18, to 4.25% to 4.50%.
- From September 16, 2024 to January 13, 2025, the 3-month par yield fell from 4.96% to 4.37%, following the cuts.
- Over the same dates the 2-year yield rose from 3.56% to 4.40% and the 10-year from 3.63% to 4.79%.
- In the ACM model, the 10-year's expected-rate component rose 0.30 point while its term premium rose 0.93 point, from -0.28 to 0.65.
- Investors raised their view of where rates would settle and asked to be paid more for the uncertainty, so long yields rose while the Fed was cutting.
The Fed's balance sheet works on the term premium directly. When it buys long Treasuries, as it did from March 2020 after pledging at least $500 billion of purchases, it takes duration out of private hands and the premium falls. When it lets holdings run off, private buyers must absorb more. The FOMC ended that runoff on December 1, 2025, and Treasury's August 2026 refunding statement noted that it is monitoring the Fed's purchases of Treasury bills.
How do inflation expectations show up in yields?
Through the breakeven rate: the gap between a regular Treasury yield and a TIPS yield of the same maturity, roughly the inflation rate markets are pricing. If inflation averages more than the breakeven, TIPS beat regular Treasuries of the same maturity; if less, regular Treasuries win.
| Maturity | Yield | A month earlier | A year earlier |
|---|---|---|---|
| 1 month | 4.06% | 4.02% | 4.05% |
| 6 weeks | 4.09% | 4.13% | 4.02% |
| 2 months | 4.16% | 4.16% | 4.04% |
| 3 months | 4.16% | 4.20% | 3.92% |
| 4 months | 4.18% | 4.29% | 3.87% |
| 6 months | 4.25% | 4.33% | 3.79% |
| 1 year | 4.36% | 4.54% | 3.70% |
| 2 years | 4.56% | 4.88% | 3.61% |
| 3 years | 4.65% | 5.00% | 3.61% |
| 5 years | 4.71% | 5.09% | 3.72% |
| 7 years | 4.80% | 5.19% | 3.90% |
| 10 years | 4.94% | 5.29% | 4.11% |
| 20 years | 5.34% | 5.68% | 4.64% |
| 30 years | 5.31% | 5.64% | 4.65% |
| 10-year minus 2-year | +0.38 pts | +0.41 pts | +0.50 pts |
| 10-year minus 3-month | +0.78 pts | +1.09 pts | +0.19 pts |
| Maturity | Real yield (TIPS) | Nominal yield | Implied inflation (nominal minus real) |
|---|---|---|---|
| 5 years | 2.25% | 4.71% | 2.46% |
| 7 years | 2.42% | 4.80% | 2.38% |
| 10 years | 2.60% | 4.94% | 2.34% |
| 20 years | 2.92% | 5.34% | 2.42% |
| 30 years | 3.08% | 5.31% | 2.23% |
In the tables, the real yield rows are TIPS yields and the implied inflation row subtracts each from the regular yield of the same maturity. Comparing today's figures with the month-ago and year-ago columns shows whether a change in regular yields came from the real part or the inflation part, which the sections below show is the more useful question. The Treasury yield curve page explains every row and spread in the table.
Breakevens move much less than reported inflation, because they average expected inflation over 5 to 30 years. Consumer prices rose 3.7% in the 12 months to September 2026, according to the Bureau of Labor Statistics, but energy prices were up 20.4% and prices excluding food and energy only 2.6%. A spike concentrated in energy tends to lift shorter breakevens more than long ones, because investors expect it to fade. How TIPS work and when they pay off is covered in TIPS explained, and what inflation does to a saver's return is in real returns and inflation.
Which forces drove the biggest recent moves in the 10-year yield?
Mostly real yields and the term premium: in four large moves since 2023, breakeven inflation changed by 0.36 point or less. Real yields did most of the work, and the table splits each move both ways.
| Period | 10-year par yield | Real (TIPS) yield | Breakeven | ACM expected rates | ACM term premium |
|---|---|---|---|---|---|
| June 28 to October 19, 2023 | +1.27 | +0.96 | +0.31 | -0.03 | +1.42 |
| September 16, 2024 to January 13, 2025 | +1.16 | +0.80 | +0.36 | +0.30 | +0.93 |
| April 4 to April 11, 2025 | +0.47 | +0.45 | +0.02 | +0.08 | +0.44 |
| October 5 to October 30, 2026 | -0.37 | -0.35 | -0.02 | -0.03 | -0.30 |
Changes are in percentage points. The first three columns use Treasury's daily par and real yield curves; the last two use the ACM model, which works with zero-coupon yields, so its parts do not add up exactly to the par change. The final ACM figures run to October 29, the latest date in the model's file.
Worked example: Reading the October 2026 drop
- The 10-year par yield fell from 5.31% on October 5, 2026, its high for the year, to 4.94% on October 30.
- The 10-year TIPS yield fell from 2.95% to 2.60%, so 0.35 of the 0.37-point drop came from the real yield.
- The 10-year breakeven barely moved, from 2.36% to 2.34%: investors did not change their view of inflation.
- In the ACM model, the term premium fell from 0.96 to 0.66 point while expected rates slipped 0.03 point.
- The decline was investors accepting less pay for holding long debt, not a new view on Fed policy or inflation.
What is the term premium, and why does it change?
The term premium is the extra yield investors demand for holding a long Treasury instead of rolling short bills, and it rises with uncertainty about inflation, policy and supply. It compensates for the risk that rates move against the holder over many years.
The New York Fed publishes daily ACM estimates going back to 1961. The 10-year premium was -1.66 points on March 9, 2020, the lowest in the series, as investors paid up for Treasuries as a hedge days before the Fed began buying them in bulk. It was -0.97 on June 28, 2023, its low for that year, then climbed to 0.45 by October 19, 2023, the day the 10-year par yield hit 4.98%. In 2026 it peaked at 0.98 point on October 7.
A negative premium means investors accepted less than the expected path of short rates to hold long bonds, typically because those bonds rallied when stocks fell and so worked as insurance. The premium tends to rise when inflation is harder to predict, when that hedge works less reliably, when supply grows faster than demand or when the Fed stops buying. It is an estimate: other models give different levels, though they usually agree on the direction of large moves.
Does more Treasury borrowing push yields up?
Usually only at the margin: heavier issuance must be absorbed by private buyers, who may demand a higher term premium, but supply rarely sets the direction on its own. Debt held by the public was about $32.71 trillion on October 29, 2026, according to Debt to the Penny.
Treasury announces its borrowing plans each quarter. In its August 5, 2026 refunding statement it offered $125 billion of 3-year, 10-year and 30-year securities to refund about $96.3 billion of maturing debt, raising about $28.7 billion of new cash, and said it anticipates maintaining nominal coupon and floating-rate note auction sizes for at least the next several quarters. It noted growing private demand for Treasury bills, and it covers seasonal swings in borrowing by changing bill auction sizes, which puts the extra supply at the short end, where it weighs less on the term premium. The next refunding announcement is set for November 4, 2026.
Individual auctions show how supply meets demand. The new 10-year note sold on August 12, 2026 was $42 billion at a 4.683% yield with a bid-to-cover ratio of 2.53; the $39 billion reopening on October 7 cleared at 5.300% with a ratio of 2.77, near the year's high in yields. How these results are read is explained in how Treasury auctions work.
How do foreign buyers and safe-haven flows affect yields?
Foreign investors hold about 29% of publicly held Treasuries, and in a crisis the global rush for safety can drive yields sharply lower, though not every time. Treasury's international capital data put foreign holdings at $9.33 trillion at the end of August 2026, against debt held by the public of about $32.4 trillion that day.
The total barely changed over the year, from $9.25 trillion in August 2025, but its makeup did. Foreign official holders such as central banks cut their holdings from $3.92 trillion to $3.76 trillion. Japan went from $1.18 trillion to $1.07 trillion and mainland China from $700 billion to $591 billion, while holdings recorded in the United Kingdom rose from $901 billion to $1.01 trillion. The country figures show where securities are held in custody, so London's total includes investors based elsewhere.
Safe-haven demand works best when the shock is a recession scare. In late 2008 the 10-year par yield fell from 3.74% on September 12 to 2.08% on December 18. It does not hold when investors need cash or doubt US policy. In March 2020 the 10-year fell from 1.56% on February 19 to 0.54% on March 9, then rose to 1.18% by March 18 as holders sold Treasuries to raise cash, a strain the Fed met with large purchases. In the week to April 11, 2025, a week of global market turmoil, it rose from 4.01% to 4.48%, most of it term premium in the ACM model.
What are the risks of acting on what moves yields?
The main risk is mistaking an explanation for a forecast: the forces on this page explain past moves well but predict the next one poorly.
- Model risk. The term premium is an estimate, and models disagree on its level. Treat the ACM figures as one view.
- Breakeven distortions. TIPS trade less actively than regular Treasuries, so in a scramble for cash breakevens can fall for reasons unrelated to inflation.
- Surprises. A Fed statement, an inflation report or a change in auction sizes can reprice the curve within minutes, and a refunding announcement can move long yields on its own.
- Unreliable havens. As 2020 and 2025 show, Treasuries do not always rally when other markets fall.
- Price risk. A 1-point rise in yield cuts the price of a new 10-year note by about 7.5%; the arithmetic is in why bond prices fall when rates rise.
None of this changes what a Treasury pays if you hold it to maturity, as are Treasuries risk-free? explains. To lock in a rate rather than trade these forces, compare today's T-bill rates and run the numbers in the Treasury bill calculator; what a flat or inverted curve signals is in the inverted yield curve explained. Figures here are dated history, not forecasts.