Treasury Yield Curve Analysis

The 30-year Treasury rate closed at 4.86 percent Monday, down one basis point from Friday and nine basis points lower than a week ago when it stood at 4.95 percent. The 20-year maturity matched this level at 4.86 percent, slipping one basis point from Friday and falling eleven basis points over the past week. Long-term yields have retreated notably since last Monday, with the benchmark 10-year yield settling at 4.38 percent, unchanged from Friday but thirteen basis points below last week's 4.51 percent.

The broader curve shifted downward across most maturities compared to last Monday. The 7-year yield dropped fifteen basis points to 4.24 percent, while both the 5-year and 3-year moved down fifteen basis points to 4.14 percent and 4.10 percent respectively. The 2-year rate fell fourteen basis points to reach 4.10 percent. Short-term rates showed more modest moves, with the 1-year yield down seven basis points to 3.97 percent and the 6-month essentially flat at 4.00 percent. The shortest maturities saw increases, as the 4-week bill rose five basis points to 3.71 percent and the 3-month climbed two basis points to 3.87 percent.

Looking back one month, the curve has undergone a significant transformation. The 30-year yield has dropped twenty-eight basis points from its level of 5.14 percent on May 18. The 20-year has experienced the same magnitude of decline, falling from 5.14 percent to 4.86 percent. The 10-year has retreated twenty-three basis points over the month, while the 7-year is down nineteen basis points and the 5-year has fallen thirteen basis points. The most striking contrast appears in the short end, where the 6-month rate has risen twenty-three basis points, the 3-month has climbed nineteen basis points, and the 1-year has increased sixteen basis points. The 2-year has actually moved slightly higher by three basis points over the same period, showing a clear divergence from the longer end of the curve.

The yield curve has flattened considerably over both the past week and the past month. The gap between the 30-year and 3-month rates has compressed from 146 basis points a month ago to 99 basis points today. The 2-year rate now sits above the 3-month rate, indicating an inversion in that segment of the curve, with the 2-year at 4.10 percent exceeding the 3-month at 3.87 percent. Perhaps most notably, the 6-month rate at 4.00 percent has risen above the 1-year rate at 3.97 percent, creating a brief inversion at that portion of the curve. The long end of the curve from the 10-year through the 30-year remains steeply higher than the short end, with the 30-year sitting forty-nine basis points above the 3-month rate, though this spread has narrowed significantly from 112 basis points last week and 146 basis points a month ago.