IV Macro Policy & Sovereign Debt
Real yield
A bond's yield after stripping out inflation, read in the US from the market yield on Treasury Inflation-Protected Securities (TIPS).
How it works
The US Treasury sells inflation-indexed bonds (TIPS) at maturities of 5, 10 and 30 years. According to TreasuryDirect, the principal of these securities rises and falls with consumer prices. Interest is paid twice a year on the adjusted principal. At maturity the investor receives the greater of the adjusted principal and the original principal, so the principal never falls below its starting amount.
Because the inflation compensation sits in the principal, the market yield on TIPS shows the return above inflation. The Fed publishes this yield as a constant-maturity series in its H.15 release; the 10-year series carries the code DFII10 on FRED. The nominal yield roughly equals the real yield plus breakeven inflation. Between 9 and 15 October 2026 the 10-year nominal yield fell from 5.24% to 5.10%, and the real yield from 2.91% to 2.78%.
Measurement holds two traps. The real yield alone does not reveal the Fed's stance; the term premium and safe-haven demand also drive it. The fall on 15 October 2026 came not from the Fed but from bond demand triggered by a 7.6% crash on the Korean stock market. The TIPS market is shallower than the nominal market, and on stress days the liquidity gap can distort the real yield.
Why it matters here
Real rates, more than nominal rates, set the dollar and emerging markets' funding costs. When the US real yield rises, dollar assets earn more after inflation. An economy that relies on carry, such as Türkiye, must then offer a higher real rate to attract the same money. Whether a rise in yields is real or inflation-driven changes how reserves and room for rate cuts should be read.