Bonds & rates
Term premium
The extra yield investors demand for lending long rather than rolling short-term loans.
How it works
Long-dated bonds carry more uncertainty about inflation and rates, and the term premium is the compensation for that.
It can be negative when investors want the safety of long-dated government bonds badly enough to accept a lower yield than expected short rates imply.
Related terms
More in Bonds & rates
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.