Bond prices and yields move in opposite directions. When demand for Treasury bonds increases, their price rises, which pushes the yield lower. Conversely, when investors sell bonds, the price falls, causing the yield to rise to attract more buyers.

The 10-year Treasury yield serves as the benchmark for long-term fixed-rate mortgages. While your mortgage rate is not identical to the Treasury yield, lenders typically add a spread to the 10-year yield; when the yield moves, mortgage rates generally follow in the same direction.

The Federal Reserve monitors the Producer Price Index because it provides an early look at inflationary pressure. Because wholesalers are early in the supply chain, shifts in their costs often predict future changes in the Consumer Price Index (CPI), which the Fed uses to guide interest rate decisions.

You should generally avoid changing your long-term investment strategy based on short-term yield fluctuations. Yields are cyclical, and while they impact short-term savings rates and borrowing costs, maintaining a diversified portfolio is usually more effective than attempting to time the market based on interest rate news.

Bond prices and yields move inversely because the coupon payment on a bond is fixed at issuance. When market interest rates rise, new bonds are issued with higher coupons, making older bonds with lower coupons less valuable to investors, forcing their market price down to equalize the return.