- Chart on the Go
Download PDF
Looking to benchmark rates for clues about the economy? Understand the differences between the fed funds rate and 10-year Treasury yields.

-
The federal funds rate (FFR) is the Fed’s primary monetary policy tool and reflects the rate banks charge on overnight loans to other banks. Because it’s a very short-term rate, the FFR has the most direct impact on other short-term interest rates across the economy.
-
The yield on the 10-year Treasury has many drivers. For example, when economic confidence is high, demand for safe-haven assets (like Treasuries) falls. This pushes prices lower and yields higher. Yields are also influenced by uncertainty related to future inflation, growth and geopolitical risk. The 10-year Treasury yield may impact other longer term rates in the economy such as fixed-rate mortgages and corporate borrowing costs.
-
Understanding these differences is helpful for investors who look to the yield curve for signals about the economy and fixed-income markets.