US Treasury Yields

A Treasury yield is the annual return an investor gets from buying the bond at its current market price and holding it to maturity. Price and yield move against each other: when bonds get sold off, their price falls and the yield rises. Values are in percent per year and come from the constant maturity series the U.S. Treasury publishes daily.

The 10-year yield is the benchmark rate almost everything else is priced against — from mortgages to stocks and bitcoin. When it rises, the risk-free return competes with risk assets and liquidity drains out of them. The 2-year yield instead tells you what the market expects from the Fed over the coming months: it falls before the Fed actually cuts.

The 10Y-2Y spread is the difference between the two. Below zero the yield curve is inverted — short-term money costs more than long-term money, which has preceded every US recession of the past fifty years. It is not a timer, though: the gap between inversion and recession runs a year or two, and markets often rally in between.

The 30-year bond was not issued between 2002 and 2006, so its line is missing for that period and the chart bridges the gap.