The 3-year U.S. Treasury yield fell from 4.33% in January 2025 to 3.55% in December, based on the Federal Reserve’s monthly constant-maturity series. Those figures describe market yields at two points in time—not the total return earned by every investor who owned a three-year note. Understanding the difference matters when judging performance or deciding whether a Treasury fits a particular time horizon.
What the 3-year Treasury yield measures
“UST” means U.S. Treasury. The 3-year constant-maturity yield is a standardized yield for the three-year point on Treasury’s par yield curve. Treasury constructs that curve from indicative closing bid-side quotations on recently auctioned securities and interpolates between maturity points. The quotations are market indications, not necessarily prices at which a transaction occurred. Treasury has used a monotone-convex spline method for the curve since December 6, 2021. See the Treasury’s interest-rate statistics and methodology.
It is a useful benchmark for comparing rates across dates, but it is not necessarily the yield or coupon on a particular outstanding Treasury note. The three-year point is a curve observation; an individual note has its own maturity date, coupon, and market price.
Coupon, yield, and total return are different
- Coupon: The stated interest rate and payment terms for a specific note.
- Yield: A measure that relates a security’s price to its cash flows. The constant-maturity figure is a standardized point on a yield curve, not a personal earning rate.
- Total return: The change in an investment’s value over a holding period, including coupon income and any price gain or loss. The result depends on the specific security, purchase price, cash flows, sale or maturity value, timing, and any reinvestment assumptions.
How the 3-year yield moved in 2025
The Federal Reserve’s monthly 3-year constant-maturity series recorded the following observations, quoted on an investment basis:
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| Observation month | 3-year constant-maturity yield | What it tells you |
|---|---|---|
| January 2025 | 4.33% | Monthly market-yield observation |
| December 2025 | 3.55% | Monthly market-yield observation |
| August 2026 | 4.28% | Latest monthly observation in the series cited here |
Source: the Federal Reserve’s 3-year constant-maturity H.15 data. The January-to-December comparison is a decline of 0.78 percentage points in the quoted yield between those monthly observations. Monthly points do not show every daily move during the year.
In its June 2025 Monetary Policy Report, the Federal Reserve described short- and medium-term nominal Treasury yields as moderately lower on net since the beginning of 2025 at that point. It said a significant decline in real yields had offset higher near-term inflation compensation. That report provides contemporaneous context, not a complete account of every move in the three-year series. Read the Fed’s June 2025 Monetary Policy Report summary.
Why the yield change is not a 2025 return figure
The change from 4.33% to 3.55% does not establish what an investor earned on a three-year Treasury note. The series tracks a standardized market yield, not the price history and coupon payments of one identified issue. No specific CUSIP or matching total-return series is identified by those monthly observations.
To calculate a defensible return for a particular note, you need its purchase price, coupon cash flows during the holding period, ending sale price or maturity payment, and the relevant dates. If comparing a total-return index instead, its methodology and measurement period must match the claim. Do not label the decline in the constant-maturity yield as “the 3-year Treasury’s return.”
How yield changes affect an existing note
A fixed-coupon note’s market value can change when market yields change. If yields rise, an existing note with a lower coupon is generally less attractive at its old price, so its resale price can fall. If yields decline, that price effect can run in the other direction. Treasury’s markets FAQs provide general information about Treasury securities.
Holding a specific note to maturity and selling it earlier are different plans. A hold-to-maturity plan centers on the note’s contractual cash flows and maturity payment, assuming the investor can hold it and the issuer makes those payments. Selling before maturity means accepting the market price available then, which may be above or below the purchase price. The size of that price change depends on the specific issue and market conditions; the yield observations above do not quantify it.
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What the later 2026 figures add—and do not add
The latest monthly observation in the cited Federal Reserve series is 4.28% for August 2026, above the December 2025 observation. It is not an October 8, 2026 quote, and the monthly series does not supply the full daily path. For a live figure, consult Treasury’s daily curve or the Federal Reserve data feed and identify the observation date.
In its July 2026 report, the Federal Reserve said Treasury yields had risen since the start of that year, particularly at shorter maturities, as the market-implied path for policy rates moved higher. The report also cited elevated inflation relative to the Fed’s 2% objective, energy-related supply shocks associated in part with the Middle East conflict, and greater confidence in labor-market stability. Those are the report’s dated explanations of market conditions, not a promise about where the three-year yield will go. See the July 2026 Monetary Policy Report summary.
How to assess whether a 3-year Treasury fits your needs
A quoted yield alone does not determine whether a Treasury is suitable. Compare alternatives using the same practical questions:
- Time horizon and liquidity: When might you need the money, and can you hold the specific note until maturity?
- Yield basis: Are you comparing the same kind of yield and calculation, rather than a curve benchmark with a fund distribution rate or bank account rate?
- Price sensitivity: Would you need to sell before maturity, and could a market-price decline disrupt your plan?
- Reinvestment risk: If coupon payments or proceeds become available before you need the money, what rates may be available then?
- Account and tax circumstances: How would the investment’s tax treatment and account location affect your own situation?
These factors also matter when comparing a three-year note with Treasury bills, longer-term notes, money-market funds, or bank deposits. The yield series and reports cited here do not provide a current, apples-to-apples comparison of those choices or a personalized recommendation.
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