The 2-year Treasury yield has risen 111 basis points this year, flattening the curve

The Treasury yield curve has flattened this year because the middle of it moved most: the 2-year yield rose 111 basis points from January 2 to November 4, against 71 basis points for the 10-year and 42 for the 30-year, according to daily par yield curve data from the US Treasury. The 3-month bill rose 56 basis points. The differences are computed from the published daily yields, and they show where the repricing happened, not why.

The year's start and the latest close, maturity by maturity

On January 2 the 3-month bill yielded 3.65%, the 2-year 3.47%, the 10-year 4.19% and the 30-year 4.86%. On November 4 the same four yields were 4.21%, 4.58%, 4.90% and 5.28% (Treasury data).

That is a rise of 56 basis points at three months, 111 at two years, 71 at ten years and 42 at thirty (computed). Short bills moved about half as much as the 2-year, and the longest bond moved least of the four.

The 10-year yield reached 5.31% on October 5 and has since fallen 41 basis points to 4.90% (computed). The 10-year yield's retreat from that peak was covered when it stood 40 basis points lower; the 2-year yield, at 4.84% on October 5, has come down 26 basis points (computed), less than the 10-year.

The gap between two and ten years has halved

The 10-year yield minus the 2-year yield was 72 basis points on January 2 and 32 basis points on November 4 (computed). It was narrower in between: on September 21 the 2-year yielded 4.76% and the 10-year 4.96%, a gap of 20 basis points, the lowest of the year in the Treasury series (computed from the daily data).

The gap between the 10-year and the 30-year also narrowed, to 38 basis points from 67 (computed). Both measures are flatter than at the start of the year even though every maturity yields more.

What the Fed did while the middle repriced

The Federal Reserve raised its target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent on September 16, according to the Fed's statement. At its meeting ending October 28 it kept the range unchanged, and Lisa D. Cook and Beth M. Hammack voted against, preferring a quarter-point rise.

The 3-month bill yield of 4.21% on November 4 is 21 basis points above the top of the 4% range (computed). The Treasury data show the level but not the reason, and a bill's yield is not a forecast of the policy rate.

Real yields rose at every maturity, most at five years

The Treasury also publishes yields on inflation-protected securities, which strip out expected inflation. The 5-year real yield was 1.46% on January 2 and 2.39% on November 4, a rise of 93 basis points (computed). The 10-year real yield rose to 2.64% from 1.94%, or 70 basis points, and the 30-year real yield to 3.08% from 2.63%, or 45 basis points (computed).

Because the 10-year nominal yield rose 71 basis points, almost all of its rise this year is real yield (computed). The gap between the 30-year and 5-year real yields narrowed to 69 basis points from 117 (computed). The real curve flattened in the same way as the nominal one.

The 10-year real yield was 1.72% on February 27, the lowest close of the year in the Treasury series, and 2.95% on October 5, the highest (computed from the daily data). That is a range of 1.23 percentage points within eight months. It has since eased by 31 basis points from the October peak to 2.64% (computed), so a large part of the year's swing has already partly reversed while the January-to-November comparison above still shows a net rise.

Consumer prices, the other side of the comparison

The consumer price index (not seasonally adjusted) stood at 336.940 in September 2026 and 324.800 in September 2025, which is 3.7% higher over the year (computed from the St. Louis Fed's series). The 3-month bill, at 4.21%, therefore yields about half a percentage point more than the year's rate of consumer price inflation (computed).

What the numbers do not show

The yield data do not show who bought or sold, nor why the 2-year moved most. They are closing yields for one day each, not averages, and a single day can differ from the days around it. The inflation comparison uses the past year's price change, not expected inflation.

A flatter curve asks more of the long-term holder than of the short-term saver

We think the flattening matters more for savers' choices than for forecasts. For an investor with a horizon of five years or more, the 5-year real yield of 2.39% and the 10-year's 2.64% are the starting points for inflation-adjusted returns on Treasuries held to maturity: the extra yield for lending for 30 years instead of 10 is now only 38 basis points. That is the opportunity, and the threat sits beside it: if the energy-led inflation the central banks describe persists, current nominal yields may leave long-dated holders with less than they expect, and the longest bonds still carry the most price risk if yields rise again.

We expect, on conditions rather than as a call, that the curve stays flat if the Fed keeps its range and the 2-year stays above 4.5%. Our view would change if the 2-year yield fell back below the 10-year by much more than the current 32 basis points, which would suggest the market had stopped pricing further rises. We would watch real yields, not nominal ones, because they have carried the year's move.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.