Treasury Yield Curve Analysis

The 30-year Treasury yield stood at 4.88 percent on Thursday, down three hundredths of a percent from Wednesday and five hundredths of a percent lower compared to last Thursday when it traded at 4.93 percent. The benchmark long-term rate has eased modestly over the past week, providing some relief to borrowers and buyers of long-duration assets. Despite the weekly decline, the 30-year remains significantly elevated compared to levels seen earlier in the year.

Rates moved lower across nearly the entire yield curve compared to one week ago, with the biggest declines concentrated in the 1-to-7-year maturity range. The 2-year yield fell to 3.79 percent from 3.96 percent last Thursday, a drop of 17 hundredths of a percent, while the 3-year slipped to 3.82 percent from 4.00 percent. The 10-year retreated to 4.31 percent from 4.42 percent, and the 20-year dipped to 4.88 percent from 4.96 percent. Shorter-dated bills and notes also moved lower, though by more modest amounts, with the 3-month and 6-month both trading near 3.70 percent.

Looking back 30 days to mid-February, the curve has shifted substantially higher across all maturities, with the most pronounced moves occurring at the short end. The 2-year climbed to 3.79 percent from 3.47 percent, a gain of 32 hundredths of a percent, while the 3-year rose to 3.82 percent from 3.50 percent. The 10-year stands at 4.31 percent versus 4.08 percent one month ago, and the 30-year has climbed to 4.88 percent from 4.70 percent. Even the shortest maturities moved higher, with the 6-month rising to 3.72 percent from 3.60 percent.

The yield curve has steepened noticeably over the past month after a period of inversion. One month ago, the 2-year exceeded the 10-year rate, creating an inverted curve, but today the 2-year sits below the 10-year. The gap between the 2-year and 10-year has widened from negative territory to a positive spread of 52 hundredths of a percent. The difference between the 10-year and 30-year has narrowed slightly to 57 hundredths of a percent, suggesting the long end of the curve has not risen as dramatically as the middle portion. Compared to last week, the entire curve shifted downward by roughly 11 to 18 hundredths of a percent in the middle maturities, bringing some stability after recent volatility.