Term premiums refer to the extra yield investors demand to hold a longer-term debt securities instead of a series of shorter-term securities.
Term premiums account for the uncertainty and risks associated with longer time horizons. They reflect factors such as interest rate risk, inflation uncertainty, and changes in economic conditions.
Essentially, term premiums compensate investors for the possibility that long-term rates might not move as expected over the life of the security.
Term premiums technically apply to all sorts of fixed income instruments, including bonds, mortgage-backed securities, and so on, but they're most commonly used in the context of government bonds.