What method does the U.S. Department of Treasury use to estimate 30-year bond yields?


Quick Answer

The U.S. Department of the Treasury uses methods such as yield-to-maturity calculations or spot rate calculations to determine estimated yields on 30-year Treasury bonds, explains Investopedia. The yield-to-maturity calculation assumes the bondholder keeps the instrument until its maturity date.

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Full Answer

The yield-to-maturity calculation is the rate of return expected on any type of U.S. Treasury bond until its maturity date, states Investopedia. The bonds maturity dates last anywhere from one day, five days, six months, 10 years or 30 years. The calculation uses the bond’s current market price along with the current coupon interest rate. The yield-to-maturity calculation assumes bondholders reinvest all interest payments at the bond’s current yield until maturity.

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