Interest Rate Update

Economy
Interest
Rates



Treasury Yields

Treasury yields represent the return on investment for U.S. government debt securities, rate will vary based on the security’s term length.

Daily Treasury Yields

  • Source: Board of Governors of the Federal Reserve System (US), Market Yield on U.S. Treasury Securities at Constant Maturity, Quoted on an Investment Basis, retrieved from FRED.



Key Treasury Yields

  • Source: Board of Governors of the Federal Reserve System (US), Market Yield on U.S. Treasury Securities at Constant Maturity, Quoted on an Investment Basis, retrieved from FRED.




Supplemental Info

Key Treasury Yields

  • 3-Month Treasury Bill aka T-Bill – Good for tracking short-term interest rate trends and Fed policy expectations.
  • 2-Year Treasury Note – Closely watched for Fed policy expectations; tends to react quickly to interest rate changes.
  • 5-Year Treasury Note – A middle ground between short- and long-term bonds; useful for gauging medium-term economic sentiment.
  • 10-Year Treasury Note – The most important benchmark for long-term rates, mortgage rates, and economic growth expectations.
  • 30-Year Treasury Bond – Watched for long-term inflation expectations and investor confidence in sustained economic growth.


Interpretation

  • Short-term (3M, 2Y): Directly impacted by Federal Reserve interest rate changes.
  • Medium-term (5Y): A balance between growth expectations and interest rate sensitivity.
  • Long-term (10Y, 30Y): Signals economic confidence, inflation expectations, and mortgage rate trends.


Key Terms

  • Treasury Bills (T-Bills): Short-term securities maturing in 4, 13, 26, or 52 weeks. They are sold at a discount and redeemed at face value upon maturity. The difference represents the interest earned.
  • Treasury Notes (T-Notes): Medium-term securities with maturities of 2, 3, 5, 7, or 10 years. They pay a fixed interest rate every six months until maturity.
  • Treasury Bonds (T-Bonds): Long-term securities maturing in 20 or 30 years. Like T-Notes, they pay a fixed interest rate semiannually.
  • Treasury Inflation-Protected Securities (TIPS): These are designed to protect against inflation. The principal value adjusts based on changes in the Consumer Price Index (CPI), ensuring that your investment keeps pace with inflation. TIPS are available with maturities of 5, 10, and 30 years.
  • Floating Rate Notes (FRNs): These have variable interest rates that adjust periodically. The rates are tied to the discount rates of 13-week T-Bills. FRNs have a two-year maturity and pay interest quarterly.
  • Yield Curve: a plot the yields of Treasury securities against their maturities.
    • A normal upward-sloping curve suggests economic growth.
    • An inverted curve can indicate a potential recession.





  • Document Build: 06:56 PM, April 16, 2025