Treasury Yield Curve Analysis

The 30-year Treasury yield fell to 5.17 percent on Tuesday, down from 5.28 percent one week ago. This represents a notable decline of 11 basis points for the longest maturity, marking the most significant weekly drop in that part of the curve. Rates at the very front end were largely unchanged, with the 4-week bill holding steady at 3.79 percent and the 6-week bill remaining at 3.78 percent. The overall picture for the week shows yields moving lower across most maturities, with the steepest declines concentrated in the longer end of the curve.

Looking at the broader yield curve compared to last Tuesday, most maturities moved lower while the shortest bills edged slightly higher. The 1-year rate rose to 4.01 percent from 3.99 percent, a small increase of 2 basis points. The 6-month and 4-month bills also ticked up marginally. In contrast, the 2-year yield dropped to 4.17 percent from 4.19 percent, the 5-year fell to 4.35 percent from 4.37 percent, and the 10-year declined to 4.64 percent from 4.71 percent. The 20-year saw one of the larger declines, falling to 5.16 percent from 5.28 percent.

Over the past month, the yield curve has shifted higher, particularly at the long end. The 30-year rate now stands at 5.17 percent compared to 5.08 percent on July 14, an increase of 9 basis points. The 20-year has climbed to 5.16 percent from 5.09 percent over the same period. The middle portion of the curve also moved higher, with the 10-year rising to 4.64 percent from 4.58 percent and the 5-year increasing to 4.35 percent from 4.31 percent. Short-term rates have shown mixed movement over 30 days, with the 4-week bill rising to 3.79 percent from 3.73 percent while the 2-month bill dipped slightly to 3.80 percent from 3.82 percent.

The curve remains inverted through the 10-year maturity, with the 7-year at 4.48 percent sitting below the 10-year at 4.64 percent. The inversion between these two maturities is notably smaller than it was last week when the 10-year exceeded the 7-year by 18 basis points versus just 16 basis points today. However, the curve steepens significantly beyond 10 years, with the 20-year at 5.16 percent and 30-year at 5.17 percent extending well above the 10-year level. Comparing this shape to one month ago, the long end has steepened considerably as rates there rose while shorter maturities stayed relatively flat, widening the gap between the 10-year and 30-year from roughly 50 basis points to 53 basis points.