Treasury Yield Curve Analysis

The 30-year Treasury yield climbed to 4.91 percent on Tuesday, marking an 8 basis point jump from the 4.83 percent seen one week earlier. This represents the highest level for the longest maturity since late last year. The yield has been on a steady climb over the past week, climbing consistently higher each day. Investors have been adjusting their expectations as economic data continues to show resilient spending and persistent inflation pressures.

The broader Treasury curve shifted higher across nearly all maturities compared to last Tuesday. The 10-year yield rose to 4.3 percent from 4.18 percent, an increase of 12 basis points. The 5-year moved to 3.86 percent from 3.75 percent, while the 7-year climbed to 4.08 percent from 3.95 percent. Even the shorter end saw increases, with the 2-year yield at 3.6 percent versus 3.53 percent the prior week. The only maturity that bucked the trend was the 4-week bill, which ticked up only marginally to 3.75 percent from 3.72 percent.

Looking back a month to mid-December, the yield curve has shifted in a notable pattern. The 30-year has risen from 4.8 percent to 4.91 percent, gaining 11 basis points over the period. The 10-year remains unchanged at 4.3 percent compared to a month ago, which is surprising given the aggressive moves elsewhere. The 5-year has moved from 3.78 percent to 3.86 percent, an 8 basis point increase. Perhaps most striking is the 2-year, which has actually declined slightly from 3.61 percent to 3.6 percent over the past month. This divergence between short-term and long-term rates has created an interesting dynamic across the curve.

The curve shape has steepened noticeably when comparing today to both last week and one month ago. The spread between the 2-year and 10-year has widened from about 65 basis points last week to 70 basis points currently, showing the front end of the curve is not moving as quickly as the belly and long end. The 30-year to 10-year spread has also widened, moving from 65 basis points a week ago to 61 basis points today. Compared to a month ago, the long end has risen sharply while the front end has stayed relatively flat, creating a more pronounced upward tilt in the middle and back portions of the curve. The short end from 4-weeks through 1-year remains inverted, with yields declining as maturity lengthens.