Treasury Yield Curve Analysis

The 30-year Treasury yield stood at 5.01 percent on Wednesday, inching down two hundredths of a percent from yesterday's close of 5.03 percent and dropping ten hundredths from the 5.11 percent recorded one week ago. This long-duration benchmark has settled into a tight range between 5.01 and 5.03 over the past two trading sessions after moving lower from the 5.11 level seen last Wednesday.

The broader yield curve showed a notable decline across intermediate and long maturities compared to the prior week. The 2-year rate fell to 4.00 percent from 4.04 percent seven days earlier, while the 5-year dipped to 4.17 percent versus 4.22 percent last week. The 10-year slid nine hundredths to 4.48 percent from 4.57 percent, and the 20-year dropped nine hundredths to 5.01 percent from 5.10 percent. Shorter-dated instruments including the 3-month, 6-month, and 1-year were relatively stable, changing by only one to two hundredths of a percent from last Wednesday.

Looking at the longer trend over the past month, rates have moved higher across most maturities with the steepest increases appearing at the 2-year and 3-year tenors. The 2-year climbed twenty-four hundredths of a percent from 3.76 percent in mid-April to the current 4.00 percent, while the 3-year rose thirty hundredths from 3.79 percent to 4.09 percent. The 5-year moved up twenty-seven hundredths to 4.17 percent, and the 10-year gained nineteen hundredths to reach 4.48 percent. The 20-year showed the largest monthly increase at fourteen hundredths, advancing from 4.87 percent to 5.01 percent, while the 30-year rose twelve hundredths from 4.89 to 5.01 percent. The front end of the curve from 4-week through 3-month remained essentially flat over the same period.

The curve retained its inverted shape with short-term rates below their longer-term counterparts. The 3-month at 3.68 percent sits below the 2-year at 4.00 percent, and the gap between them has widened compared to both last week and one month ago. A notable development is that the 20-year and 30-year yields converged to the same level at 5.01 percent, whereas the 20-year previously traded above the 30-year just a week ago and only two hundredths above it a month prior.