Treasury Rates Update: August 21st, 2025

In this week’s Treasury market analysis, economist Bill Knudson highlights a modest upward move in long-term yields, underscoring how investor sentiment continues to balance between inflation stability and medium-term uncertainty.

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Upcoming Key Economic Data Release:  

• Next new job release is 9.5.25

• Next inflation release 9.11.25

• Next Fed meeting is 9.17.25  

Treasury Rates Update: August 21st, 2025

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Key Developments

• 10-Year Treasury Yield: Rose 4 basis points (bp) over the week to 4.33%, with a net increase of 10bp across the past two weeks.

• Broad Market Movement: Rates across maturities from 2 years and longer increased by 4–5bp, while the 1-month rate edged up only 1bp.

• Yield Curve Structure:

  • The curve remains positively sloped beyond 2 years.

  • However, the medium-term slope continues to flatten, hinting at ambivalence over future growth prospects.

• Spread Trends:

  • The 10–2 year Treasury spread narrowed slightly from 0.55% to 0.54%, showing a small degree of curve flattening.

• Macroeconomic Signals:

  • CPI held steady at 2.7%.

  • Markets await the next Fed meeting on September 17, alongside jobs data (September 5) and CPI (September 11).

Knudson’s Perspective

The persistence of modest rate increases signals that investors are cautiously repricing expectations, particularly as the Fed approaches a pivotal meeting. While headline inflation is stable, the flattening in mid-curve yields reflects lingering concern about long-term growth. For decision-makers, Knudson emphasizes vigilance: short-term calm can mask early signs of structural change.