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Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →Read a Treasury yield curve by identifying its source and date, then comparing yields at named maturities. Its slope and shape show how yields differ across maturities on that date; they can offer clues about market views of future interest rates and the economy, but they are not a certain forecast.
What the Treasury yield curve shows
A yield curve, also called the term structure of interest rates, relates debt securities’ yields to their remaining time to maturity. It summarizes yields across maturities at a particular time. Market participants and policymakers watch curves for clues about perceptions of the future policy-rate path and the economic outlook, according to the Federal Reserve.
There is more than one U.S. government yield curve. The U.S. Treasury’s official curve is a par yield curve. The Federal Reserve publishes a separate smoothed nominal curve, built using a different set of securities and a different fitting method. A yield reading is meaningful only with its curve series and observation date identified.
How to read the curve’s axes and shape
Maturity runs along the horizontal axis, usually from shorter to longer terms; yield runs along the vertical axis. Compare selected short-, intermediate- and long-term maturities rather than treating a single point as the whole curve.
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- Upward-sloping: yields at the longer maturities you selected are higher than yields at the shorter maturities.
- Flat or flatter: the difference between the selected shorter- and longer-term yields is small, or has narrowed compared with another date.
- Inverted: yields at the selected shorter maturities are higher than those at the selected longer maturities. An inversion can occur over part of the curve; say which maturities you are comparing.
These are descriptions of observed yields, not explanations of why they moved. A curve’s shape alone does not establish the cause.
A practical method for comparing curves across dates
- Choose and label the series. Use Treasury’s par curve or a Federal Reserve curve, and state which one. Their definitions and inputs differ.
- Record the observation date. Treasury rates are daily readings, while publication can be delayed; do not confuse the date of the rates with the time they became available.
- Choose the maturities and comparison. Compare the same points or spread on both dates—for example, the difference between a named longer maturity and a named shorter maturity. State the maturities, dates and yields if giving a numerical change.
- Describe what moved. Say whether short, intermediate or long yields rose or fell, and whether the selected spread widened or narrowed. A steeper curve can result from different parts moving in different directions, so the label alone is not a complete account.
- Separate observation from interpretation. First report the yield or spread change; then, if useful, explain cautiously what it may imply about market views. Do not claim a cause or forecast that the curve itself cannot establish.
Treasury and Federal Reserve curves are not interchangeable
Both are useful, but their yields should not be mixed as if they were the same series. Treasury constructs its official par curve from indicative bid-side quotations for the most recently auctioned securities. The Federal Reserve’s nominal curve is a smoothed estimate using off-the-run coupon securities and excluding Treasury bills and floating-rate notes.
| Feature | Treasury | Federal Reserve |
|---|---|---|
| Curve definition | Par yield curve; constant-maturity Treasury (CMT) yields are interpolated at fixed maturities. | Smoothed nominal yield curve. |
| Input securities | Indicative bid-side quotations for the most recently auctioned securities; these are not actual transaction prices. | Off-the-run coupon securities; bills and floating-rate notes are excluded. |
| Fitting method | Bootstraps instantaneous forward rates at input maturities, then uses monotone convex interpolation. | Svensson model since 1980; Nelson–Siegel before 1980. |
| What the reported yield represents | A par yield for a theoretical constant maturity, not necessarily the yield on a particular Treasury security. | A yield on the Federal Reserve’s smoothed nominal curve; model decompositions are separate estimates. |
Treasury’s methodology was revised February 18, 2025. Its daily input quotations come from the Federal Reserve Bank of New York at or near 3:30 p.m. each trading day; rates are usually available by 6:00 p.m. Eastern, though delays can occur. See Treasury’s daily rates and methodology notes for the series and daily observations.
Treasury CMT yields are bond-equivalent yields: simple annualized yields for securities paying semiannual interest, not effective annual yields or APYs. Because they are interpolated theoretical par yields, a CMT value may not match the yield on a specific Treasury security. Treasury’s Interest Rates FAQ explains these qualifications.
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What an inversion can—and cannot—tell you
An inversion means the short-term yields you specify exceed the longer-term yields you specify. It can reflect conditions, investor beliefs or monetary policy that push short rates above longer rates; the shape does not, by itself, identify which factor is responsible. Treasury cautions that future economic and monetary policies affecting the par yield curve cannot be accurately forecast, and describes attempts to forecast future CMT rates as risky.
Federal Reserve research has studied the slope and inversion of particular yield-curve measures as leading indicators of recession. That makes an inversion a historically studied signal, not a guarantee that a recession will follow. The result depends on the curve measure and spread being examined; “the yield curve” without that qualification is too broad. See the Board’s discussion of the yield curve and recession prediction.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Using the curve to think about interest-rate expectations
Market yields incorporate pricing by investors, so a curve may provide clues about perceptions of future policy rates and the broader outlook. But it is not a direct reading of a single consensus forecast: yields also reflect other market forces, and the curve’s shape alone cannot tell you what will happen next.
Federal Reserve staff use term-structure models to decompose nominal yields into estimated expected short-rate and term-premium components. Neither component is directly observed; both are model estimates. The estimates can be delayed, revised or affected by methodological changes, so name the model and date when citing them. The Board provides its yield-curve models and data with that context.
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