Treasury Yield Curve Analysis

The 30-year Treasury yield ended the week at 5.19, continuing a downward trend that has pushed rates lower across the entire curve. Compared to last Friday when the 30-year stood at 5.27, that represents an 8 basis point decline in just one week. Yesterday the rate sat at 5.22, so there was another modest pullback on the final trading day of the week. The 30-year has now settled back toward levels seen earlier in the summer after spiking higher in recent weeks.

The curve shifted lower across nearly all maturities compared to last week. The 2-year rate dropped from 4.28 to 4.19, while the 10-year fell from 4.75 to 4.65. The biggest weekly declines came at the 5-year and 7-year points, each down 10 basis points. Short-term bills saw more modest moves, with the 3-month rising slightly to 3.87 while the 6-month slipped to 3.96. Even the long end of the curve showed meaningful improvement, with the 20-year down 8 basis points to 5.20. Virtually every maturity from 2 years out finished the week below where it started.

Looking back over the past month, the curve tells a strikingly different story of upward pressure. The 30-year has climbed 32 basis points from 4.87 in late June, while the 10-year has risen 27 basis points from 4.38. The intermediate maturities show even steeper moves, with the 7-year up 26 basis points and the 5-year up 23 basis points over the same period. Short-term rates have also increased but at a more modest pace, with the 3-month up just 4 basis points and the 1-year up 7 basis points. The longest maturities have seen the most dramatic monthly increases, with the 20-year leading the way at 33 basis points higher than a month ago.

The yield curve remains steeply upward-sloping, with the shortest rates at 3.79 and the longest at 5.19. The spread between the 2-year and 10-year sits at 46 basis points, indicating a normal but gradual slope. Comparing this to last week, the curve has flattened slightly as longer rates fell more sharply than shorter ones. Looking at the 30-day comparison, the curve has steepened considerably, as long-term rates jumped significantly while short-term rates moved up more gradually. The 20-year to 30-year spread has narrowed to just 1 basis point, suggesting these two long-dated maturities are trading nearly in line with each other, a notable development compared to the wider gaps that existed both last week and a month ago.