Treasury Yield Curve Analysis

The 30-year Treasury yield closed at 4.86 percent on Friday, up from 4.81 percent at the same time last week. This marks a notable rise for the longest maturity as investors returned to markets following the New Year's holiday. The 20-year yield also moved higher, reaching 4.81 percent compared to 4.76 percent one week ago. This weekly increase in long-term rates suggests continued pressure on the longer end of the curve.

Short-term rates showed mixed movement over the past week. The shortest maturities, including 4-week and 6-week bills, ticked slightly higher to 3.72 and 3.71 percent respectively. However, the 2-month and 4-month bills declined, falling to 3.66 and 3.62 percent. The 1-year yield dropped to 3.47 percent from 3.49 percent a week ago. Meanwhile, longer maturities from 5 years through 30 years all moved higher, with the biggest increases occurring at the 5-year and 7-year tenors, which rose by six basis points each to 3.74 and 3.95 percent.

Comparing to one month ago, rates across the curve tell a different story. The 30-year yield has climbed 15 basis points from 4.71 percent in late November. Short-term rates have fallen significantly over the past month, with 4-week bills dropping 31 basis points and 6-week bills down 30 basis points. The 3-month rate fell to 3.65 percent from 3.90 percent a month ago. The 5-year, 10-year, and 20-year maturities all sit roughly 12 to 14 basis points higher than 30 days ago, showing a sustained shift upward in the middle to long portion of the curve.

The yield curve has steepened noticeably over the past month. Short-term rates have declined while longer-term rates have risen, widening the gap between the front end and the back end. The 2-year sits at 3.47 percent while the 10-year reached 4.19 percent, maintaining a meaningful positive spread. This differs from the inversion pattern seen earlier, as the curve now shows a more typical upward slope from the 2-year out to the 30-year. Compared to last week, the entire curve has shifted higher, though the increases have been most pronounced in the middle maturities between 5 and 20 years.