Definition
The extra compensation investors require to hold a long-term bond instead of repeatedly rolling short-term bonds over the same horizon.
A long-term Treasury yield can be separated conceptually into the expected path of future short rates and a term premium for duration and uncertainty. The premium is not observed directly; it is estimated by a model and can be negative. DollarLiquidity.com tracks the Federal Reserve Board's Kim-Wright estimate for a 10-year zero-coupon Treasury. In the Price axis of the Liquidity Lens, its level and direction show whether long-duration risk is being repriced. It is display context and does not enter the DLI score.