Yield to Maturity (YTM)
Yield to maturity is the total annual return a bond will deliver if bought at today's price, held until it matures, and all payments are made as promised.
YTM combines all of a bond's cash flows into one annualized rate: the coupon payments plus any gain or loss from buying above or below face value. Technically, it is the discount rate that makes the present value of those future payments equal the bond's current price.
Example: a bond with a $1,000 face value, a 3% coupon and five years to maturity trades at $950. You collect $30 a year and also gain $50 at maturity. Its YTM is therefore higher than 3%, roughly 4.1%.
YTM is the standard way to compare bonds with different prices, coupons and maturities. It rests on assumptions, though: that the issuer does not default, that you hold to maturity and that coupons can be reinvested at the same rate. For callable bonds, investors also look at yield to call, since the issuer may repay early.
When news reports say Treasury yields rose, they usually mean yield to maturity on recently issued Treasuries.