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2026-05-26 08:09:19
[US Treasury Yield Spread Narrows to One-Year Low as Markets Bet on Fed Maintaining High Interest Rates for Longer Under Warsh's Leadership] (1) A key indicator of US Treasury yield spreads has narrowed to its lowest level in a year: the spread between the 5-year and 30-year Treasury yields has fallen to about 81 basis points, the lowest since May 2025. This is an important indicator of the premium investors are willing to pay for holding long-term US Treasuries. (2) This move was mainly driven by a sell-off in short-term US Treasuries, which are more sensitive to changes in Fed policy expectations. Traders have therefore increased their bets that the Fed may keep interest rates at higher levels for a longer period under the leadership of new Chairman Kevin Warsh. (3) As of last Friday's close, the spread between the 2-year and 30-year yields also narrowed to its lowest level since July.
