Treasury Yield Curve Analysis

The 30-year Treasury yield settled at 5.23 percent on Monday, down from 5.31 percent one week ago. This represents the largest decline among long-term maturities over the past week, as longer-duration bonds saw renewed demand. The 20-year rate also moved lower, dropping to 5.21 percent from 5.30 percent the prior Monday. Despite this week's improvement, the long end of the curve remains elevated compared to levels seen earlier in the summer.

The broader curve shows a mixed picture compared to last week, with rates moving in different directions depending on maturity. The 3-year rate climbed to 4.31 percent, up six one-hundredths from 4.25 percent, while the 2-year rose to 4.24 percent from 4.19 percent. The 5-year also increased, moving to 4.41 percent versus 4.38 percent the prior week. On the shorter end, the 6-month ticked up to 3.96 percent and the 1-year reached 4.04 percent, both marginally higher. Meanwhile, the shortest maturities of 4 weeks and 6 weeks both moved slightly lower over the period.

Looking back 30 days to mid-July, the curve has undergone a meaningful shift. The 30-year rate has climbed from 5.10 percent to 5.23 percent, while the 20-year moved from 5.11 percent to 5.21 percent. The 10-year increased to 4.70 percent from 4.62 percent, and the 7-year rose to 4.55 percent from 4.48 percent. These longer-maturity moves stand in contrast to the shorter end, where rates have actually declined. The 6-month dropped to 3.96 percent from 4.03 percent, the 4-month fell to 3.90 percent from 3.97 percent, and the 1-year slipped to 4.04 percent from 4.12 percent. This divergence means the long end has moved higher while the short end has moved lower over the past month.

The yield curve continues to display a notable inversion, particularly between the intermediate and shorter maturities. The 2-year rate of 4.24 percent sits above the 10-year rate of 4.70 percent, though the gap has narrowed from last week when the spread was wider. The curve remains relatively flat through the middle maturities before steepening toward the long end, with the 30-year at 5.23 percent barely above the 20-year at 5.21 percent. Compared to a month ago, the curve has steepened in the middle and long portions while the inversion between short and intermediate maturities has eased slightly, reflecting the different forces acting on different parts of the curve.