Treasury Yield Curve Analysis

The 30-year Treasury yield settled at 4.97 percent Friday, essentially unchanged from yesterday's 4.98 percent but noticeably higher compared to last week's 4.91 percent. This represents a six basis point increase for the long bond over the past seven days. The 20-year maturity, which sits just below the 30-year on the curve, also finished the week higher at 4.96 percent, up from 4.88 percent last Friday. Long-term rates have moved solidly higher over the past week, pushing the benchmark 30-year yield close to the five percent threshold it has approached several times this year.

The broader curve shows a week of consistent upward movement across most maturities. The 10-year yield climbed to 4.39 percent from 4.31 percent last Friday, an eight basis point gain. The 7-year moved from 4.10 to 4.20 percent, and the 5-year rose to 4.02 percent from 3.92 percent. Medium-term rates showed the most pronounced weekly shift, with the 3-year jumping eleven basis points to 3.91 percent and the 2-year reaching 3.88 percent versus 3.78 percent. Short-term rates were relatively stable, with the 3-month holding at 3.68 percent and the 6-month unchanged at 3.71 percent. The front end of the curve from 4 weeks to 6 months traded in a narrow range between 3.68 and 3.76 percent.

Looking back one month, the curve has undergone notable compression at the short end while long-term rates have remained steady. The 1-year yield has fallen sharply from 3.80 percent to 3.73 percent, a seven basis point decline over 30 days. Three-month rates dropped from 3.74 to 3.68 percent. However, the long end tells a different story. The 10-year has gone nowhere, sitting at 4.39 percent both today and a month ago. The 20-year and 30-year have barely moved, finishing within a single basis point of where they traded in late March. The middle of the curve from 2 years through 7 years shows minimal change over the month, suggesting these maturities have found a trading range.

The yield curve currently exhibits a steep slope from the 2-year through the 30-year, with the difference between the 2-year and 30-year at roughly 1.09 percentage points. The 2-year to 10-year spread stands at about 51 basis points in favor of the longer maturity. Compared to last week, the curve has shifted upward as a whole, with longer maturities rising more than shorter ones, creating a slight parallel move higher. Over the past month, the curve has flattened at the long end while the short end has declined noticeably. This creates an interesting dynamic where the curve from 2 years out is roughly where it was thirty days ago, but the front end has pulled back significantly, steepening the short-to-middle portion of the curve.