Key points
- Benchmark for all other bond yields (spreads measured off Treasuries).
- Bill, note, bond maturities: 4-week to 30-year.
- Traded in highly liquid, deep markets; smallest bid-ask spreads.
Example
If the 10Y Treasury yields 4.5%, a corporate bond yielding 6.0% has a 150 bps spread; a widening to 200 bps signals increased credit risk.
In history
In 2022-23 the 10-year Treasury yield rose much less than the Fed's policy rate: from about 1.6% to a peak near 5%, while the funds rate rose by more than 5 points. The curve inverted because markets expected rates to fall again later.
Related terms