Treasury Yield Curve Analysis

The 30-year Treasury yield closed at 5.28 percent on Tuesday, ticking lower from 5.31 percent on Monday but rising from 5.24 percent one week ago. This represents a modest retreat from the previous session while still holding above last week's level. The move follows a pattern of fluctuation in long-term rates that has characterized recent trading.

The yield curve showed a mixed picture compared to last Tuesday, with short and intermediate maturities declining while longer-dated bonds edged higher. The 6-month rate fell to 3.94 percent from 3.99 percent a week ago, and the 1-year yield dropped to 3.99 percent from 4.03 percent. The 2-year declined to 4.19 percent versus 4.22 percent, while the 5-year moved to 4.37 percent from 4.39 percent. The 10-year rate rose slightly to 4.71 percent from 4.70 percent, and the 20-year climbed to 5.28 percent from 5.25 percent. Most movements were small, with the front end of the curve seeing the most noticeable declines while the long end posted modest gains.

Looking back 30 days to mid-July, rates have shifted higher across nearly the entire curve. The 4-week bill rose to 3.78 percent from 3.69 percent, while the 1-year moved to 3.99 percent from 4.06 percent. The 5-year climbed to 4.37 percent from 4.27 percent, and the 10-year reached 4.71 percent compared to 4.55 percent a month ago. The most dramatic shifts occurred at the long end, where both the 20-year and 30-year jumped to 5.28 percent from 5.05 percent. The 3-year also moved higher, reaching 4.26 percent versus 4.18 percent four weeks prior.

The curve has shifted from a partially inverted shape one week ago to a mostly normal configuration, with longer maturities yielding more than shorter ones. The 4-week to 1-year segment remains relatively flat with all rates between 3.78 and 3.99 percent. From the 2-year onward, yields climb steadily through 4.19, 4.26, 4.37, 4.53, and 4.71 percent before jumping to 5.28 percent at the 20-year and 30-year tenors. This creates a notable steepening from the 10-year to the 20-year, a gap of 57 basis points. Compared to a month ago, the entire curve sits at higher levels and has become considerably steeper, particularly in the long end where the 20-year and 30-year now yield the same, eliminating the spread that had existed between those maturities.