Treasury Yield Curve Analysis

The 30-year Treasury rate settled at 4.85 today, matching where it closed last Thursday and showing no change over the week. The 20-year rate came in at 4.79, also unchanged from a week ago, while the 10-year finished at 4.21, down slightly from 4.24 last Thursday. The longest maturities have held steady despite volatility elsewhere on the curve.

Most maturities shifted lower compared to last week, with the biggest moves concentrated in the 1-year and 2-year areas. The 1-year rate fell to 3.44 from 3.50, a noticeable drop, while the 2-year moved to 3.47 from 3.53. The 3-year, 5-year, and 7-year each came in lower by a few hundredths of a percentage point. The shortest maturities showed minimal change, with the 4-week and 6-week bills holding near 3.72 and 3.71 respectively. The 6-month bill edged down to 3.58 from 3.62 a week ago.

Since late December, rates across the curve have moved lower, with the most pronounced declines at the short end. The 1-year rate dropped from 3.87 to 3.44 over the past month, one of the larger shifts seen. The 2-year fell to 3.47 from around 3.70 a month ago, and the 3-year moved to 3.55 from approximately 3.76. The 5-year came in at 3.74 compared to roughly 3.92 a month prior, while the 10-year decreased to 4.21 from approximately 4.43. The 30-year rate has declined to 4.85 from about 5.07 a month ago, marking a meaningful retreat at the long end as well.

The yield curve today shows a relatively flat shape between the 3-year and 5-year maturities before steeper increases further out. The 2-year and 3-year are separated by only 8 basis points, while the gap from the 3-year to 5-year widens to 19 basis points. The curve then climbs more sharply from the 7-year through the 30-year, with each maturity stepping higher. Compared to last week, the short end has shifted down more than the long end, slightly steepening the middle portion of the curve. Over the past month, rates have declined across all maturities, with the short end dropping more sharply than the long end, producing a notably flatter curve than what existed four weeks ago.