Treasury yield

Treasury yield is the return an investor earns on US government debt, covering the full range of Treasury bills, Treasury notes, and Treasury bonds across their different maturities. Because Treasuries are backed by the full faith and credit of the US government and are considered to carry essentially no credit risk, Treasury yields are widely treated as the closest available approximation of a risk-free rate.

Treasury yields serve as the foundation for pricing across the rest of the financial system. A corporate bond's yield is typically described in terms of its credit spread over the Treasury yield of a similar maturity, and stock valuation models often use a Treasury yield as the risk-free rate input in calculating a discount rate or cost of equity. When Treasury yields rise, the higher return available on a nearly risk-free asset can make riskier assets like stocks comparatively less attractive, all else equal, part of why moves in Treasury yields are watched so closely across asset classes, not just within the bond market.

Yields differ across maturities, and the full set of Treasury yields at a given point in time, plotted against their maturities, forms the yield curve. Watching how yields at different points on that curve move relative to each other, not just where any single yield sits, gives investors a read on shifting expectations for growth, inflation, and Federal Reserve policy.