Treasury Yield Curve Analysis

The 30-year Treasury yield rose to 5.17 percent Thursday, up from 5.09 percent one week ago. This 8 basis point gain over the week places long-term rates at their highest level in recent trading history. The 20-year yield moved slightly above the 30-year, reaching 5.20 percent compared to 5.09 percent last Thursday. The long end of the curve has shown notable strength this week, with the 20-year leading gains among longer maturities.

The entire yield curve shifted higher Thursday compared to last week, with increases ranging from 6 basis points at the shortest maturity to 21 basis points at the 2-year point. The 2-year rate climbed to 4.37 percent from 4.16 percent one week ago, representing the largest weekly jump in absolute terms. Short-term rates also moved sharply higher, with the 1-year rising to 4.15 percent from 3.99 percent last Thursday. The mid-curve from 2-year through 10-year saw increases of 14 to 21 basis points over the week, while the 10-year reached 4.71 percent compared to 4.57 percent previously.

Looking back 30 days to mid-June, the curve has moved substantially higher across all maturities. The 30-year has climbed from 4.95 percent to 5.17 percent, an increase of 22 basis points over the month. Short-term rates have risen even more dramatically, with the 1-year gaining 30 basis points from 3.85 percent and the 6-month up 28 basis points from 3.81 percent. The 2-year has increased from 4.05 percent to 4.37 percent, a 32 basis point monthly gain, while the 10-year moved from 4.45 percent to 4.71 percent. The 20-year shows the largest monthly increase at 24 basis points, rising from 4.96 percent to its current 5.20 percent level.

The yield curve retains its inverted shape in the shorter section, with the 3-month rate at 3.95 percent sitting above the 1-year at 4.15 percent. However, a notable structural shift has emerged at the long end, as the 20-year at 5.20 percent now exceeds the 30-year at 5.17 percent, inverting this part of the curve. Comparing this to one month ago when the 30-year sat above the 20-year, this represents a meaningful change in the curve's shape. The inversion between 2-year and 10-year yields has narrowed slightly this week but remains inverted at 34 basis points, down from 37 basis points last Thursday and slightly tighter than the 40 basis point inversion seen a month ago.