On Nov 29, 2024 the yield curve averaged 4.356 in the aggregate, after which we began to see duration normalize.
On Feb 21, 2025 it averages 4.357.
Now, however, there are seven securities in the Bills category, not just six, with Treasury rolling out the new 1.5-month (6-week) security as part of debt-ceiling-forced "extraordinary measures". There are five in the Notes, and two in the Bonds.
Duration normalization has now partly reversed because of the extraordinary measures, at least on a weekly basis, with yields for Notes once again falling below those for Bills on average on Friday.
If you count just the traditional 1MO, 3MO, 6MO, and 1Y among the Bills, the Bills yield average is nearly identical to Notes at 4.2825.
These falling yields may be both signaling and spurring increased purchasing of UST, including among the Notes to lock in an anticipated disappearance of opportunity as Bills issuance surges to fund the Treasury General Account. The increased issuance of Bills means yields fall across the curve, at least temporarily, as investors lock in.
The special 6-week security rolled out at 4.41 on 2/18 and was paying 4.39 on Friday vs. only 4.15 for the 1Y and 4.42 for the 10Y, the latter's lowest yield all month. Falling yields for the 10Y is a specific goal of the Treasury under Trump. Evidently the temporary 6-week Bill is helping them achieve that . . . for now.
Reported Feb 5 and Feb 6:
Bessent's focus on 10-year US Treasury yield may let Fed off the hook
..."The
president wants lower interest rates and ... in my talks with him, he
and I are focused on the 10-year Treasury," Bessent said. "He is not
calling on the Fed to lower rates. He believes that if we ... deregulate
the economy, if we get this tax bill done, if we get energy down, then
rates will take care of themselves and the dollar will take care of
itself." ...
10-year Treasury yield drops as traders digest news on issuance, fresh data
... The [Treasury] department also said it will be issuing more short-term bills
than usual as it uses “extraordinary measures” to keep the government
operating while Congress battles over the debt limit. That announcement
came despite new Treasury Secretary Scott Bessent previously criticizing
his predecessor, Janet Yellen, for issuing unusually large amounts of
shorter-term debt. ...
