The Treasury yield curve is a line connecting the yields on U.S. Treasury securities from the shortest maturity to the longest, at one point in time. It is one of the most useful single pictures of the interest rate environment: in a glance it shows what it costs the government to borrow for a month, for two years, for ten years and for thirty.
See today’s curve, and how it looked a month earlier, on our Treasury rates dashboard.
How the curve is built
Each business day the U.S. Department of the Treasury publishes its par yield curve: yields for fixed maturities from 1 month to 30 years, derived from end-of-day market prices of recently auctioned securities. Plot those yields with maturity on the horizontal axis and yield on the vertical axis, and you have the yield curve.
The four basic shapes
Normal (upward sloping)
Long-term yields are higher than short-term yields. This is the most common shape. Investors usually want extra return for tying money up longer and for the greater uncertainty about inflation and rates far into the future.
Flat
Short- and long-term yields are similar. Flat curves often appear during transitions, for example when the market expects short-term rates to stop rising.
Inverted
Short-term yields are higher than long-term yields. This usually happens when investors expect short-term rates to fall in the future. Read What Does an Inverted Yield Curve Mean?
Humped
Yields in the middle maturities are higher, or lower, than at both ends. Real curves often mix shapes: for example inverted at the short end and upward sloping beyond five years.
What shapes the curve
- The short end (bills, up to about a year) follows the Federal Reserve’s policy rate and expectations for its next moves.
- The middle (2 to 7 years) reflects the expected path of policy over the next several years.
- The long end (10 to 30 years) reflects long-run growth and inflation expectations and the term premium, the extra return demanded for long commitments.
Measuring the slope
Rather than eyeballing the curve, analysts measure its slope with spreads between two maturities:
- 10-year minus 2-year, often called 2s10s.
- 10-year minus 3-month.
A positive spread means upward slope between those points; a negative spread means inversion. Our Treasury Spread Calculator computes any spread and charts it back to 1990, marking every inverted period. Spreads are quoted in basis points.
Why the yield curve matters
- For savers, it shows how much more (or less) you earn by locking in money for longer.
- For borrowers, it hints at how short-term and long-term loan rates compare.
- For banks, which often borrow short and lend long, the slope affects profitability.
- For economists, it is a summary of market expectations about rates, inflation and growth.
Reading the curve on our dashboard
The dashboard chart plots the latest curve as a solid line and the curve from about one month earlier as a dashed line, so you can see how it has shifted. A shift up across all maturities means rates rose broadly; a steepening means long rates rose relative to short rates; a flattening means the opposite. Below the chart, a data table lists the same values, and the Key Takeaways panel states the current 2s10s and 10-year minus 3-month spreads.
Limits of the yield curve
The curve reflects market prices, which include risk premiums and technical factors like supply and demand for particular maturities. It is not a pure forecast of future interest rates, and its shape has not reliably predicted the timing of economic events. Use it as context, not as a crystal ball.