Real 10Y Yield (DGS10 - T10YIE)

The Real 10Y Yield (DGS10 – T10YIE) indicator computes the inflation-adjusted U.S. 10-year Treasury yield by subtracting the 10-year breakeven inflation rate (T10YIE) from the nominal 10-year Treasury yield (DGS10), both sourced directly from FRED. By filtering out inflation expectations, this script reveals the true, real borrowing cost over a 10-year horizon—one of the most reliable gauges of overall risk sentiment and capital–market health.

How It Works

Data Inputs
• DGS10 (Nominal 10-Year Treasury Yield)
• T10YIE (10-Year Breakeven Inflation Rate)
Both series are fetched on a daily timeframe via request.security from FRED.

Real Yield Calculation

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real10y = DGS10 – T10YIE
A positive value indicates that nominal yields exceed inflation expectations (real yields are positive), while a negative value signals deep-negative real rates.

Thresholds & Coloring
• Bullish Zone: Real yield < –0.1 %
• Bearish Zone: Real yield > +0.1 %

The background turns green when real yields drop below –0.1 %, reflecting an ultra-accommodative environment that historically aligns with risk-on rallies. It turns red when real yields exceed +0.1 %, indicating expensive real borrowing costs and a potential shift toward risk-off.

Alerts
• Deep-Negative Real Yields (Bullish): Triggers when real yield < –0.1 %
• High Real Yields (Bearish): Triggers when real yield > +0.1 %

Why It’s Powerful

Forward-Looking Sentiment Gauge
Real yields incorporate both market-implied inflation and nominal rates, making them a leading indicator for risk appetite, equity flows, and crypto demand.

Clear, Actionable Zones
The –0.1 % / +0.1 % thresholds cleanly delineate structurally bullish vs. bearish regimes, removing noise and false signals common in nominal-only yield studies.

Macro & Cross-Asset Confluence
Combine with equity indices, dollar strength (DXY), or credit spreads for a fully contextual macro view. When real yields break deeper negative alongside weakening dollar, it often precedes stretch in risk assets.

Automatic Alerts
Never miss regime shifts—alerts notify you the moment real yields breach key zones, so you can align your strategy with prevailing macro momentum.

How to Use

Add to a separate pane for unobstructed visibility.

Monitor breaks beneath –0.1 % for early “risk-on” signals in stocks, commodities, and crypto.

Watch for climbs above +0.1 % to hedge or rotate into defensive assets.

Combine with your existing trend-following or mean-reversion strategies to improve timing around major market turning points.

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Feel free to adjust the threshold lines to your preferred sensitivity (e.g., tighten to ±0.05 %), or overlay with moving averages to smooth out whipsaws. This script is ideal for macro traders, portfolio managers, and quantitative quants who demand a distilled, inflation-adjusted view of real rates.