Treasury Yields Snapshot: June 13, 2025

As of June 13, 2025, the 10-year Treasury yield stood at 4.41%, with the 2-year at 3.96% and the 30-year at 4.90%; analysis of the 10-2 and 10-3 month Treasury yield spreads indicates these remain key recession indicators, with historical lead times between negative spreads and recession onset varying significantly. Despite the Fed initiating a rate-cutting cycle in September, mortgage rates initially moved in the opposite direction, though they have recently declined while the Fed holds rates steady, with the 30-year fixed rate currently at 6.84%.

Analysis

As of June 13, 2025, the U.S. Treasury yield curve shows the 10-year note at 4.41%, the 2-year note at 3.96%, and the 30-year note at 4.90%. This configuration indicates a positive 10-2 year spread of +0.45% (45 basis points), meaning this segment of the curve is not currently inverted. However, the article underscores the historical significance of prior inversions as recession indicators. The 10-2 spread was continuously negative from July 5, 2022, to August 26, 2024, and was last negative on September 5, 2024. Similarly, the 10-3 month spread was negative from October 25, 2022, to December 12, 2024, and has fluctuated between positive and negative territory since February 26, 2025. Historically, recessions have followed such inversions with lead times varying from 18 to 92 weeks for the 10-2 spread and 34 to 69 weeks for the 10-3 month spread, though a false positive occurred in 1998. In the mortgage market, the 30-year fixed rate stands at 6.84%. Notably, mortgage rates initially rose when the Federal Reserve began a rate-cutting cycle in September 2024, but have recently declined while the Fed has maintained steady rates, indicating complex dynamics beyond direct Federal Funds Rate influence.

Key Decisions for Investors

• Despite the current positive 10-2 Treasury spread, the extended periods of inversion observed until late 2024 for both the 10-2 and 10-3 month spreads historically signal an elevated risk of recession, warranting continued close monitoring of economic data for confirmation.
• The recent atypical behavior of mortgage rates—rising after initial Fed rate cuts in September 2024 and subsequently declining during a period of steady Fed rates—suggests investors should analyze a broader range of factors, including market expectations and credit risk premiums, when assessing borrowing costs and housing market trends.
• Given the current yield levels (2-year at 3.96%, 10-year at 4.41%, 30-year at 4.90%) and the lingering recessionary signals from past yield curve inversions, investors should strategically evaluate fixed income allocations, potentially utilizing ETFs like Vanguard 0-3 Month Treasury Bill ETF (VBIL), Vanguard Intermediate-Term Treasury ETF (VGIT), and Vanguard Long-Term Treasury ETF (VGLT) to manage duration exposure in anticipation of potential economic shifts.