Treasury Yield Curve Analysis

The 30-year Treasury yield closed at 4.90 percent Thursday, slipping 5 basis points from last week's 4.95 percent reading. This marks a notable retreat at the long end of the market after two consecutive weeks of relative stability around the 4.95 level. The yield has now pulled back from the recent high of 4.97 percent reached in late May, though it remains elevated compared to earlier this year.

The broader curve showed mixed movements compared to last Thursday. Short-term rates from 2 months through 6 months all moved higher by 2 to 11 basis points. The 1-year note bucked the trend, dipping 2 basis points to 4.00 percent. The middle of the curve saw modest declines, with 2-year and 3-year yields each falling 1 basis point to 4.19 percent, while the 5-year dropped 4 basis points to 4.23 percent. The 7-year fell 3 basis points to 4.34 percent and the 10-year rose just 1 basis point to 4.46 percent. The long end moved lower, with the 20-year declining 5 basis points to 4.91 percent.

Looking back 30 days to mid-May, rates across the curve tell a different story. Short-term maturities from 3 months through 1 year all moved higher, with increases ranging from 14 to 24 basis points. The 1-year rate made the biggest jump, climbing from 3.76 percent to 4.00 percent. Mid-range maturities also rose substantially, with the 2-year up 27 basis points, the 3-year up 25 basis points, and the 5-year up 19 basis points. The 7-year gained 12 basis points while the 10-year moved just 5 basis points higher to 4.46 percent. The long end was essentially flat, with the 20-year unchanged at 4.91 percent and the 30-year actually falling 7 basis points from its 4.97 percent level a month ago.

The yield curve remains upward sloping but has become notably flatter over the past month, particularly in the middle to long end. The spread between 3-month and 10-year rates has widened to about 63 basis points from 49 basis points one month ago, suggesting increased steepness at the front end. The curve shows an unusual characteristic where the 20-year yield at 4.91 percent sits just above the 30-year at 4.90 percent, creating a slight inversion at the very long end. Comparing this pattern to both last week and 30 days ago, the most significant development is the substantial rise in short-term rates over the past month, which has compressed the overall curve shape while leaving the longest maturities relatively unchanged.