Treasury Yield Curve Analysis

The 30-year Treasury yield closed at 4.94 percent on Tuesday, up slightly from 4.93 percent one week ago. This long-term rate has held relatively steady over the past week, showing minimal movement in the extended portion of the curve. The yield remains below the 5.03 percent level seen a month ago, representing a notable decline in long-term borrowing costs over the past 30 days.

The past week brought substantial increases across the short and intermediate portions of the curve. The 1-year rate jumped to 4.01 percent from 3.84 percent last Tuesday, a significant move of 0.17 percent. The 3-month rate rose to 3.85 percent from 3.79 percent, while the 6-month climbed to 3.96 percent from 3.81 percent. The 2-year moved to 4.16 percent from 4.05 percent, and the 10-year reached 4.50 percent compared to 4.43 percent last week. Most maturities from 3 months out through 10 years are higher than they were seven days ago, with the most pronounced increases concentrated in the 1-year and 3-year segments.

Looking back 30 days, the picture becomes more nuanced. The 3-year has climbed to 4.22 percent from 4.01 percent, matching the 1-year as one of the biggest movers over the month with an increase of 0.21 percent. The 2-year sits at 4.16 percent versus 4.00 percent a month ago. However, the longer end of the curve tells a different story. The 30-year has fallen to 4.94 percent from 5.03 percent, and the 20-year dropped to 4.96 percent from 5.02 percent. The 4-week rate declined to 3.65 percent from 3.71 percent over the same period. This divergence between the intermediate and long portions of the curve is a notable feature of the past month's trading.

The curve shape has shifted considerably over both timeframes. Compared to last week, the spread between the 10-year and 30-year has narrowed to 0.44 percent from 0.50 percent, suggesting some flattening in the longer end. The difference between the 2-year and 10-year stands at 0.34 percent, relatively unchanged from last week's 0.38 percent. Over the past month, the curve has undergone a more dramatic transformation, with the 30-year declining by 0.09 percent while the 2-year rose by 0.16 percent. This has significantly reduced the inversion that existed 30 days ago between certain maturities, creating a more consistently upward-sloping curve from the 4-week through 20-year segments, with the 30-year sitting just below the 20-year rate.