// definition
Term premium
Compensation for holding duration
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Short definition
The extra yield an investor demands for holding a long bond rather than rolling short-term placements, compensating for rate, inflation and debt-supply risk. Estimated by the New York Fed's ACM model. Negative or nil for a decade, it turned positive again in 2026, still short of its long-run historical average.
risk atlas
Knowledge map
Intuition
The term premium isolates the pay demanded for carrying duration, once the expected path of short rates is stripped out.
Formula
long yield ≈ average expected short rates + term premiumWhy it matters now
When long-debt supply grows, QT removes the public buyer and foreign demand shifts, an expected fall in short rates can coexist with a rising long yield.
Related analyses
- The return of the term premiumDecomposing the long rate and the US debt regime.
- The Treasury basis tradeLeverage, repo and bond-market fragility.
- Repo, the liquidity factoryFunding chains that transmit a rate shock.
Related guides
- Reading the Treasuries marketCurve, auctions, holders and the term premium.
- Reading TIC dataForeign holdings and the custody bias.
- Net liquidity: TGA, RRPReserve channels and Treasury cash.
- Reading the CBO outlookFiscal trajectory and the interest bill.
Related datasets
- risk.jsonPublic snapshot of the risk signals.
- debt-risk.jsonDebt Risk Radar snapshot with provenance.
- risk-diff.json1, 7 and 30-day diff of signals, sources and models.
- signals/history.jsonPoint-in-time history of the signals.
Signals using it
- MethodologyDebt, interest burden, current stress and structural vulnerability.
- Risk DiffRecent change in risk and source freshness.
- Black Box RecorderHashed frames to replay a point-in-time state.
Primary sources
- Federal Reserve & FREDRates, the Fed balance sheet, FRED series and the New York Fed ACM model.
- U.S. Treasury Fiscal DataDebt, Treasury cash, DTS and auctions.
- U.S. Treasury TICCross-border holdings and flows of Treasuries.
- Congress.gov, GovInfo & CBOBudget projections, texts and estimates.
- Bank for International SettlementsGlobal debt, banks and market fragilities.