The Treasury yield curve, explained

The U.S. Treasury issues debt at every maturity from 1 month to 30 years. Each maturity trades at its own yield. Plot those yields on a chart, lowest maturity to highest, and you get the yield curve.

In normal times, longer maturities pay higher yields — investors demand more to lock up money longer. That's the normal or upward-sloping curve.

When the curve inverts — short-term yields higher than long-term — the bond market is signaling recession concern. Every U.S. recession since the 1970s has been preceded by an inversion of the 2-year vs 10-year spread.

How to read it

• Steeper curve (10y minus 2y getting wider): markets expect growth and possibly higher inflation. Banks like steep curves — they borrow short and lend long.
• Flat curve: markets uncertain. Banks earn less spread.
• Inverted curve: recession risk. Short-term rates are punitively high relative to long-term expectations.

Why it matters to consumers

• Savings / CD rates track short-end yields. When the short end is high, CDs pay well.
• Mortgage rates track long-end yields (specifically the 10-year). When the long end is high, mortgages are expensive.
• Refinancing windows open when the long end drops sharply while the short end is sticky — that's the rare environment where you can lock in a 30-year mortgage well below your savings rate.

A practical use

If the 5-year Treasury pays more than the 30-year, ask yourself why you would lock in a 30-year mortgage today instead of waiting 6–12 months. The market is telling you it expects rates lower.

This is not advice — it's a heuristic. The bond market can be wrong, and waiting on the sidelines has its own cost.

The full current yield curve is on the home page of this site.