U.S. Treasury Yields Diverge: Long-End Rises While Short-End Falls

Divergence in Treasury Yields

By the close of trading on Wednesday (February 4) in New York, the yield on the U.S. 10-year Treasury rose by 1.20 basis points to 4.2775%. Meanwhile, the 2-year Treasury yield dropped by 0.82 basis points to 3.5614%. In contrast, the 30-year Treasury yield surged by 2.07 basis points, settling at 4.9149%.

Yield Curve Dynamics

The 2s10s spread widened by 2.027 basis points to 71.410 basis points, signaling a more optimistic outlook for future economic growth. Inflation-linked securities also showed movement, with the 10-year TIPS yield rising 1.74 basis points to 1.9305%. The yield briefly spiked after the release of the ADP employment report, then pulled back following the ISM non-manufacturing data.

Inflation Expectations Drive Market Sentiment

Shifting inflation expectations played a key role in Treasury yield movements. The 10-year TIPS yield was notably volatile after key economic releases. The 2-year and 30-year TIPS yields also increased by 1.70 and 2.12 basis points respectively, reflecting rising concerns about medium- to long-term inflation trends.