Macro and Rates

These terms are common in macro discussions and help connect risk-free yields to broader financial conditions.

Policy Rate

A policy rate is a central bank's target interest rate that influences broader borrowing costs and risk-free yield benchmarks.

Duration

Duration is a measure of how sensitive a bond's price is to changes in interest rates, with longer duration generally implying higher sensitivity.

Term Premium

Term premium is the additional yield investors demand for holding longer-maturity bonds instead of rolling short-term debt, reflecting uncertainty over time.

Inflation Expectations

Inflation expectations describe what households and markets believe inflation will be in the future, which can influence wages, prices, and interest rates.