Trending Content - Sales and Trading Forum
Career Resources
WSO Free Modeling Series - Now Open Through
July 31, 2026
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
High Finance Applications
Guaranteed
Get at least one offer GUARANTEED
- 1:1 support
- 92% success rate
- 2,000+ mentor network
- Unlimited Live bootcamps
- AI for resume + LinkedIn
- Networking automation tools
- HireVue simulation tool
- Full course library
- Private Slack community
- 20hrs of mocks
- + much more...
10 year is mostly changes in expected ngdp.
2 year is a mix of fed fund expectations and ngdp.
Inflation, interest rates, etc. It depends on how long you expected yields to remain higher.
Bump. Need help with this please
what about supply and auction sizes, the fed's balance sheet unwind, USD strength impacts foreign demand for USD assets...
supply and demand
You should think about what influences supply and demand for something that pays a coupon, has basically no default risk, and has extremely high liquidity. Then, think about what would influence differences between different terms for those instruments.
In short, supply/demand, but I guess thats not super helpful.
As a really crude start, you can say the N-year treasury yield is roughly the 'average' expected risk-free interest rate over the next N years. This is the expectations hypothesis (https://en.wikipedia.org/wiki/Expectations_hypothesis).
In reality, this works really well on the short end (so they say the Fed controls the short end by controlling the Fed Funds rate), but as you go further out the curve (10y+) it gets more influenced by inflation (or nominal GDP), 'term premium' (as a catch-all phrase for all the stuff not easily explained by the expectations hypothesis), and idiosyncratic supply demand. Ex: Insurance companies and pensions with long-dated liabilities (they owe more PV in liabilities if rates go down) so they buy long-dated bonds (to make money to offset this if rates go down). Reason being, as you go further out the curve, even if you know with certainty what short-term interest rates will be over N years, you are taking on far too much duration/market risk to make that sort of trade pragmatic, so other factors tend to dominate.
There is also other idiosyncratic supply demand- ex: if people panic, they tend sell US stocks to buy long-dated US treasuries (because these have more risk than short-dated bonds).
also repo (where the bond can be funded) will impact the price too, but i agree with all the above. term premium is a good one
The 2yr is most closely aligned to the expectation short term Fed Funds Rate path.
The 10yr (and then even more so the 30yr) is driven by longer term economic expectations. Since the business cycle lasts 6-12 years on avg...that puts the 10yr square in the sights of the next economic cycle (and the 30yr 3 economic cycles). The hard part is predicting the future that far out...nobody has been able to do it very well...so longer duration bonds correlate with equities and longer term economic data (like housing, inflation expectation, the credit cycle, etc..)
Its not easy, and 10 economists will have 10 different views...so its anybodies guess.
the longer end trades pretty directionally with risk assets i think.
it depends....some periods yes (recently yes) but not consistently
All good answers above but there is no one thing. You could write several chapters of a textbook on the subject.
No one fully knows because the Federal Reserve has completely killed the natural credit cycle.
This massive experiment is doomed to fail.
agreed - quantitative easing will soon be regarded as the biggest monetary policy mistake
Ipsum qui ut aut omnis dolorum. Ipsa cumque ad rerum impedit.
Maxime aspernatur quia earum dolore eaque. Numquam sequi aut sunt ipsum laudantium voluptate.
Ut maxime cum aspernatur molestiae. Nam labore ducimus perspiciatis dignissimos.
Nisi repellendus et quod consectetur aliquam error sed. Doloribus blanditiis consequatur enim tempore ducimus nemo. Cumque ea quis temporibus in odit ab. Illum assumenda rem minus quia dolores in. Et qui eveniet ut officia maiores.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...