Treasury yield.
In plain English
A Treasury yield is what you earn holding U.S. government debt, expressed as a percent per year. Because Treasuries are treated as the safest dollar investment, their yields act as the baseline that other rates are priced off. When the 10-year Treasury yield rises, fixed mortgage rates and other long-term borrowing costs usually rise with it. Yields move opposite to bond prices: when investors sell Treasuries and prices fall, yields go up.
01Why it matters
Treasury yields, especially the 10-year, are the single best early signal for where fixed mortgage rates and other long-term rates are heading, often before the Fed acts.
02The math, step by step
Fixed mortgage rates track the 10-year Treasury yield closely. If the 10-year yield climbs from 4.0 percent to 4.5 percent over a few weeks, 30-year mortgage rates typically drift up by a similar amount, because lenders price home loans off that benchmark.
03What this is NOT
A Treasury yield is not the federal funds rate. The Fed sets the federal funds rate directly; Treasury yields are set by the market as investors buy and sell government debt, though the two influence each other.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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