(Bloomberg) — The US Treasury market, already mired in one of its worst losing stretches of the year, is flashing a fresh warning sign of mounting risks as yields surge.
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The so-called term premium on 10-year Treasury notes — an expression of the extra yield investors demand for owning the debt rather than rolling over shorter-term securities — has risen from near zero to just under a quarter point so far this month to the highest since last November, a Federal Reserve gauge shows.
As academic as the indicator may sound, the measure is closely monitored by market watchers. It offers important information about investors’ perception of future risk — whether it be inflation, supply or anything else that extends beyond the expected path of short-term rates.
In the latest instance, the jump in term premium comes amid a deepening bond market selloff as traders price in a shallower path of Fed interest-rate…
