Treasury Yield Curve Analysis

The 30-year Treasury yield closed at 4.85% on Friday, holding steady from Thursday but ticking lower compared to last Friday when it sat at 4.87%. This marks a small decline of two basis points over the week. The 20-year yield also dipped two basis points, ending the week at 4.80% versus 4.82% the prior Friday. The long end of the market showed modest improvement, with investors seeing slightly lower borrowing costs on the most distant maturities.

The broader curve shifted lower across most tenors this week. The 10-year yield fell to 4.22%, down four basis points from last week's 4.26%. The 7-year moved to 3.98% compared to 4.01% the prior Friday. Shorter maturities also declined, with the 2-year dropping to 3.50% from 3.52%, and the 1-year settling at 3.45% versus 3.48% last week. The 6-month rate dipped to 3.59%, while the 3-month held relatively firm at 3.68%, nearly unchanged from last week's 3.67%.

Looking back one month, the curve has shifted upward in the middle and long end. The 5-year climbed to 3.76% from 3.68% in late December, an eight basis point increase. The 7-year rose nine basis points to 3.98% compared to 3.89% a month ago. The 10-year moved from 4.14% to 4.22%, gaining eight basis points over the month. The 30-year ticked up four basis points from 4.81% to 4.85%. Near-term rates showed more stability, with the 3-month inching up only two basis points to 3.68%, and the 1-year actually falling from 3.49% to 3.45%.

The yield curve remains inverted in the short end, with the 3-month at 3.68% sitting above the 6-month at 3.59%. This inversion widened compared to last week, when the spread between these maturities was narrower. Beyond the 1-year maturity, the curve resumes its normal upward slope, with yields climbing from 3.45% at the 1-year out to 4.85% at the 30-year. The overall curve shape has steepened over the month, as longer-term rates rose more sharply than shorter-term rates, reducing the inversion's severity while expanding the gap between 1-year and 30-year yields.