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10-year Term Premium

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How is the 10-year term premium calculated?

"Treasuries traded yesterday at the most expensive levels in more than six weeks. The 10-year term premium, a model created by economists at the Fed that includes expectations for interest rates, growth and inflation, was negative 0.94 percent, the most costly since Oct. 3. A negative reading indicates investors are willing to accept yields below what's considered fair value. The average this year is negative 0.76 percent."

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This solution answers questions regarding how the 10-year term premium is calculated. The explanation is given in 220 words with one reference.

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Problem: How is the 10-year term premium calculated?

"Treasuries traded yesterday at the most expensive levels in more than six weeks. The 10-year term premium, a model created by economists at the Fed that includes expectations for interest rates, growth and inflation, was negative 0.94 percent, the most costly since Oct. 3. A negative reading indicates investors are willing to accept yields below what's considered fair value. The average this year is ...

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