Treasury Rates Update: December 31st, 2025
- Bill Knudson
- Jan 2
- 1 min read
As we close out the final week of 2025, the U.S. Treasury market has provided a clear signal of continued yield curve normalization. In what is typically a quiet holiday period, we observed a deliberate pivot in the curve toward a more positive position. This week’s activity was characterized by a modest rise in longer-term rates and a marginal decline in short-term yields, further easing the inversion that has dominated the landscape.
The 10 Year Treasury rate concluded the week up 3bp, matching its cumulative 3bp increase over the past 14 days. Daily shifts remained subtle, with the most notable movement occurring on the final day of the year, which saw a 4bp rise.
Upcoming Key Economic Data Release:Â Â
Next net new job release is January 9
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Next inflation release January 13
Next Fed meeting is January 28Â
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Key Developments
Short-term rates showed a slight downward bias, with the 1 year rate decreasing by 2bp.
The 1 month rate remains elevated, sitting 26bp above the 1 year rate, though it only ticked up 2bp this week.
Longer-term rates moved higher in unison, with the 5 year and 10 year rates both climbing 3bp, while the 30 year rate rose 5bp.
This collective movement resulted in a steeper 10 to 2-year spread, which widened to 0.71% from 0.68% last week. Looking ahead to the start of 2026, our focus remains on the upcoming jobs data on January 9th and the CPI release on January 13th, both of which will be instrumental in shaping expectations for the January 28th Federal Reserve meeting.