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Treasury Yield

In short

Interest rate on US government bonds — benchmarks for all other rates

Treasury yields are the interest rates the US government pays to borrow money. They're the foundation of all financial pricing. When 10-year yields rise, it hurts stocks (especially growth stocks) because bonds become a more attractive alternative.

Treasury yields benchmark risk-free rates at different maturities. The 10-year yield is most important for equity valuation — it's used as the discount rate for future cash flows. Rising yields compress P/E multiples and hurt bond prices.

Related concepts

  • Yield Curve — Normally, long-term bonds yield more than short-term ones (upward sloping). When short-term yields exceed long-term (inverted curve), it's historically predicted every US recession in the past 50 years. Investors call this the most reliable recession indicator.
  • Fed Funds Rate — The Fed funds rate is the interest rate banks charge each other overnight. When the Fed raises it, borrowing becomes more expensive everywhere — mortgages, car loans, business loans. Higher rates usually hurt stocks, especially growth stocks.
  • Risk-Free Rate — The rate you earn on the safest available investment, typically short- to medium-term government debt. Everything else gets compared against it — if a 10-year government bond pays 4%, why accept only 3% from a riskier stock or corporate bond with no extra compensation?
  • Credit Spread — Credit spreads measure how much extra yield investors demand to hold corporate bonds instead of safe government bonds. Widening spreads mean investors are worried about defaults — a warning sign for stocks too.