What is the Ten Year Treasury?

An index marked by the ticker “TNX” and is published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a 10-year maturity. Yields on Treasury securities at constant maturity are determined by the U.S. Treasury from the daily yield curve. That is based on the closing market-bid yields on actively traded Treasury securities in the over-the-counter market.

How it’s used:

This figure is used as a reference point to establish the price of other securities such as corporate bonds. Treasury securities are considered risk-free since they are backed by the U.S. government. This figure, and an added margin based upon the risk involved, is used in pricing various debt securities.

Why do we care?

Because the Ten Year Treasury is influenced by the bond market and it is the most widely used indicator as to where money is moving in the markets.  As money flows into the bond market the TNX goes down,  a money leaves the bond market, the TNX goes up. The better the bond market, interest rates will drop. When the bond market is suffering, interest rates will rise.

The treasurey is a leading indictort that you will want to keep an eye on if you are considering buying or refinanceing.

Here is a typical TNX chart:

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