what impacts the 10 year treasury yield 
several factors influence the 10 year treasury yield it s directly affected by investor confidence in the markets when investors are optimistic about the economy s health they tend to invest in riskier assets reducing demand for treasury notes causing a need to increase their yield conversely in times of economic uncertainty investors often flock to the safety of treasury notes driving up their prices and lowering them inflation is another major influence as we have seen more recently higher inflation can decrease the real return on treasury notes causing yields to rise as investors demand higher returns to offset the erosion of buying power conversely low inflation can lead to lower yields lastly the yield is also affected by monetary policy decisions by the federal reserve for instance when the federal reserve chooses to raise interest rates yields on treasury notes also tend to increase reflecting the higher cost of borrowing the advantages of investing in treasury notesfixed income securities offer important portfolio diversification benefits because their returns aren t correlated with the performance of stocks government debt and the 10 year treasury note in particular are considered among the safest investments its price often but not always moves inversely to the trend of the major stock market indexes central banks tend to lower interest rates in a recession which reduces the coupon rate on new treasurys this then makes older treasury securities with higher coupon rates more desirable another advantage of investing in 10 year treasury notes and other federal government securities is that the coupon payments are exempt from state and local income taxes they re still taxable at the federal level however 6investors can choose to hold treasury notes until maturity or sell them early in the secondary market there s no minimum holding term the disadvantages of investing in treasury notesinvesting in treasury notes while considered safe comes with drawbacks treasury notes can yield less than riskier assets like equity investments or higher yielding corporate bonds this makes them potentially less profitable for investors than alternatives during periods of high inflation fixed interest payments from treasury notes can lose purchasing power if inflation outpaces the yield the real return can turn negative if you are holding longer running notes you need to ensure you understand how inflation will affect your investment an uptick in interest rates could lower the value of existing treasury notes this could result in capital losses should you liquidate your holdings before their maturity date low risk because of government backingeasy to buy and sellpartially free from state and local taxeslower yield compared with other investmentsvulnerability to inflationpotential capital loss if sold before maturity