Glossary term
Real Yield
Nominal yield minus expected inflation; the cleaner asset-allocation signal than nominal rates alone.
Real Yield is the nominal interest rate minus expected inflation, representing the true inflation-adjusted return on a bond. It is a cleaner asset-allocation signal than nominal rates because it strips out inflation expectations, isolating the genuine cost of capital. Rising real yields are particularly hard on long-duration growth equities and gold, since they raise the bar that risk assets must clear. See TIPS and Money Temperature 101.