Treasury Yield Curve Analysis

The 30-year Treasury yield closed at 4.72 percent on Friday, moving higher compared to last week when it stood at 4.69 percent. This marks a noticeable shift for the longest maturity, continuing the upward momentum that has developed in recent sessions. The 20-year rate also climbed to 4.66 percent from 4.64 percent one week earlier, showing consistent gains at the long end of the market. The overall tone has shifted toward higher yields across the board this week, reversing some of the downward pressure seen earlier in the month.

The yield curve showed broad-based increases across nearly all maturities compared to last Friday. The 2-year rate rose to 3.48 percent from 3.40 percent, while the 10-year moved to 4.08 percent from 4.04 percent. Short-term rates also pushed higher, with the 6-month climbing to 3.61 percent from 3.59 percent and the 3-month reaching 3.69 percent from 3.68 percent. The 5-year was at 3.65 percent versus 3.61 percent last week, and the 7-year increased to 3.85 percent from 3.81 percent. Every maturity from the 6-week tenor through the 30-year sector posted gains over the week.

Looking back one month to mid-January, the picture is more mixed with the short end declining while longer maturities also fell. The 1-year rate dipped to 3.51 percent from 3.52 percent, and the 2-year dropped to 3.48 percent from 3.54 percent. The 3-year fell to 3.50 percent compared to 3.59 percent a month ago. The 5-year moved to 3.65 percent from 3.75 percent, and the 10-year declined to 4.08 percent from 4.18 percent. The 30-year fell from 4.82 percent to 4.72 percent over the past month. Short-term bills maturing in 2 months or less actually moved higher over the month, with the 2-month rising to 3.74 percent from 3.63 percent.

The curve remains inverted between the short end and longer maturities, with the 1-year yield at 3.51 percent sitting below the 30-year at 4.72 percent. The spread between the 10-year and 2-year has widened to about 0.60 percent in favor of longer rates, compared to 0.64 percent just one week ago. The curve steepened noticeably over the month, as the gap between the 30-year and 10-year expanded from roughly 0.10 percent to about 0.64 percent. This represents a significant flattening reversal from the prior month when the curve was inverted by a wider margin at the short end, particularly between the 3-month and 2-year maturities.