What this actually is
The extra yield investors demand for holding a long-dated bond instead of rolling short ones. It is compensation for uncertainty about inflation and about how much debt will be issued — not for default risk.
Why it matters to a person
It is the part of long rates the Fed does not control. A rising term premium raises mortgage rates and lowers stock valuations even while the Fed is cutting, which is exactly the combination that makes a soft landing hard to engineer.
For scale
Negative for much of 2015–2021, which was historically abnormal and largely a product of central bank buying. Turned sharply positive from 2023 as issuance rose and QE ended.
How to read a release
Reading it
Rising term premium alongside falling policy rates is the fiscal-dominance signature: the bond market pricing government borrowing rather than central bank policy.
The mechanism
The extra yield demanded for holding long bonds; rises with deficits, supply, and inflation uncertainty independent of the Fed.
What to watch: ACM term premium (NY Fed). Arrives daily; the effect typically lasts months. Impact tier 2 — Directional: Moves the index for days or weeks. Scheduled data releases, policy decisions, global spillovers, and the prices of money and energy. This is the tier most professional attention is spent on.
Its neighbourhood
Everything this entry connects to directly. Click any point to follow it.
What it moves next
Documented transmission: when this moves, these tend to move after it.
What moves it
Dials it feeds
This factor is one input to a composite reading on the Analytics page.