Treasury Yield Curve Analysis

The 30-year Treasury yield climbed to 4.83 percent on Friday, edging one basis point higher than where it stood a week earlier at 4.82 percent. This long-term rate has been hovering near the highest levels seen in recent weeks, reflecting continued pressure on longer-dated borrowing costs. The 20-year yield moved to 4.79 percent, also up modestly from 4.76 percent last Friday. Despite these relatively small weekly increases, the long end of the curve remains elevated compared to late last year.

The yield curve showed a notable upward shift across most maturities compared to last week. Short-term rates from 4-week through 4-month tenors all moved higher, with the 4-week rate rising from 3.70 to 3.75 percent and the 3-month rate climbing from 3.62 to 3.67 percent. The middle of the curve saw the most pronounced weekly moves, with the 7-year rate jumping from 3.95 to 4.02 percent and the 10-year rate increasing from 4.18 to 4.24 percent. Even the 2-year rate, often sensitive to near-term expectations, ticked up from 3.54 to 3.59 percent over the week. Only the shortest 6-week tenor bucked the trend, actually declining slightly from 3.68 to 3.72 percent.

Looking back over the past month, the curve has steepened noticeably. The 2-year rate has climbed from 3.56 percent a month ago to 3.59 percent today, while the 5-year rate moved from 3.72 to 3.82 percent over the same period. The 7-year rate saw one of the larger monthly increases, rising from 3.90 to 4.02 percent. Meanwhile, very short-term rates have actually declined, with the 4-week rate falling from 3.82 to 3.75 percent and the 2-month rate dropping from 3.77 to 3.68 percent. The 30-year rate, at 4.83 percent, now sits slightly higher than the 4.79 percent recorded a month ago.

The curve currently maintains an inverted shape between the 1-year and 2-year maturities, where the 2-year rate at 3.59 percent sits above the 1-year rate at 3.55 percent. The curve then flattens through the middle portion before steepening significantly at longer maturities. The 10-year rate of 4.24 percent sits meaningfully above the 5-year rate of 3.82 percent, and the gap widens further out the curve with the 30-year at 4.83 percent. Compared to last week, the curve has shifted parallel higher across most maturities, while the monthly picture shows the front end moving lower and the middle-to-long end moving higher, creating a more pronounced steepening pattern than existed four weeks ago.