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Read a Treasury yield curve by first identifying its source and date, then comparing yields at named maturities. Its slope shows how yields differ across maturities at that moment; it can offer clues about market views of future interest rates and the economy, but it is not a certain forecast.
What a Treasury yield curve shows
A yield curve, or term structure of interest rates, relates the remaining time to maturity of debt securities to their yields. Plot maturity on the horizontal axis and yield on the vertical axis. A curve is a snapshot across maturities, not a record of one security’s yield over time.
Always name the series and observation date when describing a curve. The U.S. Treasury and the Federal Reserve publish different curve products, built from different securities and methods; their values should not be treated as interchangeable.
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How to read the curve’s slope and shape
- Upward-sloping: Longer maturities have higher yields than shorter maturities. Specify which maturities you are comparing.
- Flat: The yield difference between the selected shorter and longer maturities is small. “Flat” needs a stated comparison; it does not mean every point has the same yield.
- Inverted: A shorter maturity has a higher yield than a longer maturity over the segment being compared. An inversion may cover only part of the curve, so identify the two maturities rather than describing the entire curve as inverted without qualification.
For example, a statement such as “the two-year yield was above the 10-year yield on [date]” identifies an inversion on that segment. To say the curve steepened or flattened between dates, compare the same maturities on both dates and state which yields moved. A change in the spread can result from movement at either end—or both—so do not infer its cause from the shape alone.
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Which curve are you looking at?
U.S. Treasury par curve and constant-maturity yields
The Treasury’s official curve is a par yield curve. Under its methodology, Treasury uses indicative bid-side market price quotations—not completed transactions—for the most recently auctioned securities. The quotations come from the Federal Reserve Bank of New York at or near 3:30 p.m. each trading day. Treasury converts the input prices to yields, bootstraps instantaneous forward rates at input maturities, and applies monotone convex interpolation to construct the curve. Treasury revised the methodology description on February 18, 2025; rates are usually available by 6:00 p.m. Eastern on trading days, though delays can occur. See the Treasury Yield Curve Methodology.
Treasury constant-maturity Treasury (CMT) rates are interpolated from the daily par curve at fixed maturity points. They are theoretical constant-maturity par yields, so they may differ from the yield on any particular Treasury security. Treasury quotes these as bond-equivalent yields: simple annualized yields for securities paying semiannual interest, not effective annual yields or APYs. Details and daily series caveats are in Daily Treasury Rates and Treasury’s Interest Rates FAQ.
Federal Reserve nominal curve
The Federal Reserve publishes a smoothed nominal Treasury yield curve using off-the-run coupon securities, excluding Treasury bills and floating-rate notes. Its fitting method is the Svensson model from 1980 onward and the Nelson–Siegel model before 1980. These are not the same inputs or fitting method as Treasury’s par curve. Review the series definition and data on the Fed’s Nominal Yield Curve page.
| Feature | Treasury | Federal Reserve |
|---|---|---|
| Curve product | Par curve; CMT points are interpolated theoretical par yields. | Smoothed nominal curve. |
| Input securities | Indicative bid-side quotations for most recently auctioned securities. | Off-the-run coupon securities; bills and floating-rate notes excluded. |
| Fitting method | Bootstrapped instantaneous forward rates and monotone convex interpolation. | Svensson since 1980; Nelson–Siegel before 1980. |
| What to label when citing | Series, maturity or spread, and observation date. | Series, maturity or spread, and observation date. |
The table describes the curve products, not a claim that one is more accurate. For a clean comparison across time, use the same source, series, maturity points, and observation convention each time.
How to compare the curve across dates
- Choose the series. Decide whether you need Treasury’s par/CMT data or the Federal Reserve’s nominal curve. Record the source and exact series name.
- Set the comparison. Select the maturity points or spread you want to follow. Keep them constant across dates; changing the maturities changes the question.
- Record the observation date. Treasury rates are daily observations, generally published by 6:00 p.m. Eastern on trading days, subject to delay. Distinguish a curve’s observation date from the date it was published or retrieved.
- Describe the movement. Say whether short, intermediate, or long maturities rose or fell. If you calculate a spread, define the order—for example, 10-year yield minus 2-year yield—and report the series and both dates.
- Separate observation from interpretation. First state what changed in the yields or spread. Then, if relevant, explain what that pattern may imply for market expectations, without presenting the interpretation as a proven cause or forecast.
What the curve can—and cannot—say about expectations
Market participants and policymakers watch yield curves for clues about perceptions of the future policy-rate path and the macroeconomic outlook. The curve reflects market pricing, but it does not provide one certain forecast. Short-term rates can exceed longer-term rates when conditions, investor beliefs, or monetary policy push short rates higher. Treasury cautions that “future economic and monetary policies that impact the par yield curve cannot be accurately forecast” in its Interest Rates FAQ.
An inversion has been studied as a leading indicator of recession, but it is a historically examined signal—not a guarantee that a recession will occur. The implication depends on the specific slope measure and period being discussed. Federal Reserve research on this relationship is available in The Yield Curve and Predicting Recessions; avoid turning that research context into an unsupported probability or timing claim.
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When a model splits yields into components
Some analyses decompose nominal yields into expected short-rate and term-premium components. Those components are model estimates, not directly observed market prices. Federal Reserve staff publish term-structure models and related data on Yield Curve Models and Data. Name the model and date when citing a decomposition: staff estimates can be delayed or revised, and methods can change.
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