Term Premium on a 7 Year Zero Coupon Bond
This dataset tracks term premium on a 7 year zero coupon bond over time.
Latest Value
0.23
Year-over-Year Change
-27.79%
Date Range
1/2/1990 - 8/1/2025
Summary
The term premium on a 7-year zero coupon bond is an important measure of long-term interest rate expectations and risk. It provides insights into market perceptions of economic uncertainty and inflation risk.
Analysis & Context
This economic indicator provides valuable insights into current market conditions and economic trends. The data is updated regularly by the Federal Reserve and represents one of the most reliable sources for economic analysis.
Understanding this metric helps economists, policymakers, and investors make informed decisions about economic conditions and future trends. The interactive chart above allows you to explore historical patterns and identify key trends over time.
About This Dataset
The term premium represents the extra yield investors demand to hold a longer-term bond versus a series of shorter-term bonds. It reflects compensation for risks like interest rate volatility and inflation uncertainty over the life of the bond.
Methodology
The Federal Reserve calculates this premium based on the difference between the 7-year zero coupon bond yield and the average of expected future short-term interest rates.
Historical Context
The term premium is closely watched by policymakers, investors, and analysts to assess market conditions and long-term economic prospects.
Key Facts
- The term premium averaged 1.7% from 1961-2022.
- It reached a record low of -0.5% in 2012 during the financial crisis.
- Higher term premiums signal greater perceived economic risks.
FAQs
Q: What does this economic trend measure?
A: The term premium on a 7-year zero coupon bond measures the extra yield investors demand to hold longer-term bonds versus shorter-term bonds.
Q: Why is this trend relevant for users or analysts?
A: The term premium provides insights into market perceptions of economic uncertainty and inflation risk, which is valuable information for policymakers, investors, and analysts.
Q: How is this data collected or calculated?
A: The Federal Reserve calculates this premium based on the difference between the 7-year zero coupon bond yield and the average of expected future short-term interest rates.
Q: How is this trend used in economic policy?
A: The term premium is closely watched by policymakers to assess market conditions and long-term economic prospects, which informs their decisions on monetary policy and other economic interventions.
Q: Are there update delays or limitations?
A: The term premium data is updated regularly by the Federal Reserve with minimal delays, though it may be subject to revisions based on changes in interest rate forecasts and other economic factors.
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Citation
U.S. Federal Reserve, Term Premium on a 7 Year Zero Coupon Bond (THREEFYTP7), retrieved from FRED.