Bond yield

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A bond's yield is the figure that shows the return an investor gets on a bond. The yield is calculated using the following formula: yield = coupon amount/price. When an investor buys a bond at par, the yield is equal to the interest rate. When the price of a bond goes up, the yield goes down, and vice versa.

As U.S. Treasury note and bond yields increase, so do the interest rates on fixed-rate mortgages, making it more expensive to buy a home. This can have a negative effect on the economy and slow GDP growth. Higher Treasury note and bond yields mean that the Treasury Department will be forced to pay a higher interest rate to attract buyers. Over time, these higher rates can start to increase demand for Treasury notes and bonds, thereby increasing the value of the dollar. [1]

References

  1. Treasury Note & Bond Yields Definitions and Forecast. About.com.