Treasury ‘Term Premium’ Gauge Positive for First Time Since 2021
- Investors are seeking more compensation to buy 10-year debt
- Rise underscores chance interest rates to be higher for longer
WATCH: Strategas Strategist Verrone Says the Market Is Not Yet Suggesting That the Trend Up in Yields Is Over
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A key measure of how much bond investors are compensated for holding long-term debt turned positive for the first time since June 2021, underscoring the potential for interest rates to stay higher for longer.
The Federal Reserve Bank of New York’s gauge of the 10-year term premium became positive on Monday, after having been negative for most of the past seven years, reflecting steep increases in longer-maturity Treasury yields. The index estimates the amount by which Treasury yields exceed the expected path of short-term rates.