Short, medium, and long-term rates all rose from the previous month. The yield curve widened from the previous month and broke its one-month narrowing streak. The one-month bill maintained the lowest rate throughout the month. As the one-month rate had the smallest increase in both absolute and relative terms, the yield curve widened reducing the risk of an inversion brought upon by rising short-term rates. Such an inversion, if it were to happen would be a strong indicator for an upcoming recession.
Findings
- All rates rose in April.
- The three, five, and seven-year rates saw the largest absolute growth at 0.23 points.
- The one-month rate saw the smallest rise at 0.02 points.
- On a relative basis, the two-year rate grew the most with a 9.69 percent rise.
- The 20-year rate rose the least on relative terms with a 1.23 percent rise.
- The one-month bill maintained the lowest rate throughout the month.
- The yield curve widened 0.12 points.
Caveats
- As always, past performance is not indicative of future results.
- The rates have been at historic lows for quite some time which has not occurred previously.
Details
The breadth of the yield curve widened over the month from a range of 1.34 to a range of 1.46. The widest range was 1.56 which was hit twice on April 25 and 26 and the narrowest 1.29 which was hit on April 2.
The thirty-year bond held the highest rate throughout the month. It rose drastically in the middle of the month only to pare those gains in the final trading days of April. However, it has remained above 3 percent for the entire month save for April 2 and April 11 when it hit 2.97 and 2.99 respectively. It should be noted that the ten-year rate has also risen above 3 percent which has not happened since January 8, 2014.
The one-month note held the lowest rate for every session of the month. Additionally, it has not hit a new 12-month high for the first time in six months.
Sources
"Treasury Constant Maturity," Federal Reserve Bank of St. Louis, accessed May 3, 2018, https://fred.stlouisfed.org/categories/115.