What Are Treasury Yields? Definition and Example
Treasury yields are the interest rates the US government pays to borrow. Here is how they are set, why bond prices fall when yields rise, and what 2022 showed about it.
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What Are Real Yields? Definition and Example
The interest rate after inflation, how it is measured with TIPS, and why its swing from deeply negative to positive mattered for stocks and bonds.
Key takeaways
- A real yield is a bond’s interest rate after inflation: roughly the nominal yield minus expected inflation, and it is quoted directly by inflation-protected Treasuries (TIPS).
- The 10-year TIPS yield averaged −0.99% in December 2021, +1.59% in October 2022 and +2.64% in September 2026 (FRED).
- Rising real yields raise the discount rate on future cash flows; in 2022 long Treasuries (TLT) fell 31.2% and the Nasdaq-100 (QQQ) fell 32.6% (Exent data).
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What are real yields?
The nominal yield is what a bond pays in dollars. The real yield is what it pays in purchasing power. When inflation runs above the nominal yield, the real yield is negative and lenders lose ground. The cleanest market measure is the yield on Treasury Inflation-Protected Securities (TIPS).
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How are real yields calculated?
Real yield ≈ nominal yield − expected inflation
The gap between a regular Treasury yield and the TIPS yield of the same maturity is the breakeven inflation rate. Illustrative: a 4.5% 10-year Treasury yield and a 2.2% TIPS yield imply 2.3% breakeven inflation.
Worked example
| Month | 10-year real yield (TIPS) |
|---|---|
| Dec 2021 | −0.99% |
| Oct 2022 | +1.59% |
| Oct 2023 | +2.41% |
| Sep 2026 | +2.64% |
Source: FRED, series DFII10, monthly averages. The 2022 jump of about 2.6 points came in the same year long-duration assets fell hardest: TLT −31.2% and QQQ −32.6%, against −18.2% for the S&P 500 (Exent’s data, as of Sep 30, 2026).
Why it matters for a self‑directed investor
Real yields are the return you can earn with little risk after inflation. When they rise, distant profits are worth less today, which tends to weigh on growth stocks and long bonds (see bond duration). Read more in inflation and your portfolio.
Common mistakes
- Subtracting last year’s inflation instead of expected inflation.
- Treating TIPS as risk-free in price: they still fall when real yields rise.
- Reading one month’s move as a new trend.
- Ignoring real yields when comparing stock valuations across decades.
Frequently asked questions
It means a bond’s yield is below expected inflation, so a buyer who holds to maturity loses purchasing power. The 10-year TIPS yield was negative through most of 2020 and 2021.
Higher real yields raise the rate used to discount future profits and make safe assets more attractive. Companies whose profits lie far in the future tend to be most sensitive.
The Federal Reserve Bank of St. Louis publishes the daily 10-year TIPS yield on FRED as series DFII10.
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Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.