What it is
The real yield is the nominal yield of a bond minus the expected rate of inflation over the bond's life. It measures the true return on an investment in terms of purchasing power, rather than just the stated interest rate. The real yield is particularly relevant for fixed-income investments, as inflation erodes the value of future coupon payments and principal.
Investors monitor real yields, especially on Treasury Inflation-Protected Securities (TIPS), to gauge the market's expectation of future inflation and the attractiveness of inflation-protected assets. The Federal Reserve also considers real yields when assessing financial-conditions and the stance of monetary policy. High real yields can make bonds more attractive relative to other assets, potentially impacting stock market valuations and economic growth.
Why it matters
Real yield tells you the true return on your investments after inflation, protecting your purchasing power and guiding investment choices.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice