Treasury Rates Update: July 31st, 2025

In this week’s Treasury market report, economist Bill Knudson identifies a continued softening in long-term rates as markets navigate mixed signals ahead of major economic announcements. Despite a calm on the surface, subtle changes in slope and spreads suggest rebalancing beneath the yield curve.

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Upcoming Key Economic Data Release:  

• Next new job release is 9.5.25

• Next inflation release 8.12.25

• Next Fed meeting is 9.17.25  

Treasury Rates Update: July 31st, 2025

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Key Developments:

• 10-Year Yield Retreats: The 10-Year Treasury yield fell by 6 basis points (bp), ending the week at 4.37%. Over the past two weeks, the total decline has been 10bp.

• Yield Curve Shift:

  • 2-Year: 3.94%

  • 10-Year: 4.37%

  • 30-Year: 4.89%

  • The 10–2 Year spread narrowed to 0.43%, down from 0.52% last week—indicating flattening in the medium-term segment.

• Macro Environment:

  • Short-term rates (1-month) increased 12bp, diverging from the longer end.

  • The next jobs report (August 1) and CPI release (August 12) will be critical for forward guidance.

  • The Fed’s next policy meeting is scheduled for September 17.

Knudson interprets the yield curve flattening as a signal of increased uncertainty, not disinterest. While long-term inflation expectations appear contained, upward movement at the short end suggests markets are preparing for potential volatility. Strategic positioning now—before the economic data hits—may offer an advantage to risk-conscious investors.