Treasury Yield Curve Analysis

The 30-year Treasury yield closed Thursday at 4.93 percent, up from 4.89 percent the day before. Over the past week, the long bond has moved 10 basis points higher, climbing from 4.83 percent on March 19. Investors pulled back from longer-dated bonds throughout the session as economic data bolstered expectations that the Federal Reserve may take longer to cut interest rates. The 30-year rate has pushed closer to the 5 percent mark, a level it has approached repeatedly over the past several months.

The broader Treasury curve shifted upward across nearly all maturities this week. The 10-year yield climbed to 4.42 percent from 4.25 percent last Thursday, while the 5-year rate rose to 4.08 percent from 3.88 percent. Short-term rates also moved higher, with the 2-year reaching 3.96 percent compared to 3.79 percent a week ago. Even the shortest maturities edged up, with the 4-week rate moving from 3.73 percent to 3.74 percent. The entire curve moved between 8 and 21 basis points higher over the week, with medium-term securities showing the largest increases.

Looking back one month to mid-February, the yield curve has shifted dramatically higher. The 2-year yield has climbed from 3.47 percent to 3.96 percent, a move of nearly 49 basis points. The 3-year rate surged from 3.49 percent to 4 percent over the same period. The 5-year moved from 3.67 percent to 4.08 percent, and the 10-year climbed from 4.09 percent to 4.42 percent. The long end of the curve showed more modest increases, with the 30-year moving from 4.72 percent to 4.93 percent. Short-term rates also jumped, as the 6-month rate rose from 3.58 percent to 3.77 percent and the 1-year moved from 3.45 percent to 3.83 percent. The middle of the curve saw the largest month-over-month increases at roughly 50 basis points.

The curve shape has steepened noticeably over both the short and long term. A month ago, the spread between the 2-year and 10-year was about 62 basis points, and it has now widened to 46 basis points. The 30-year sits just below the 20-year rate, with the 20-year at 4.96 percent and the 30-year at 4.93 percent, a relatively flat section of the curve. Compared to last week, the inversion between the 3-month rate at 3.73 percent and the 2-year at 3.96 percent has deepened slightly, suggesting continued expectations that the Fed will keep rates elevated for an extended period. The front end of the curve has risen faster than the long end over the past month, though the long end has picked up more momentum this week.