The 10-Year Treasury Rate: Why Is It Important and What Can Policy Do About It?

The Issue:

Few financial indicators are as closely watched as the interest rate on 10-year Treasury securities. So much so, in fact, that Treasury Secretary Bessent stated in a February 2025 interview that “The president wants lower rates. He and I are focused on the 10-year Treasury and what is the yield of that.” What is the 10-year Treasury yield? What role does it play in the economy? What determines it? And what (if anything) can the Treasury do to affect it?

Expectations of future short-term rates are the single biggest factor affecting long-term rates, including the 10-year Treasury yield.

The Facts:

• Treasury securities are debt instruments issued by the U.S. government to finance its budget deficit.…