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On-the-Run Treasury Yield Curve


The term “On-the-Run Treasury Yield Curve” refers to a yield curve built using the most recently issued U.S. Treasury securities, that is, those that are currently “on-the-run” or actively traded. It’s a line plot of the yields of on-the-run treasury securities over different maturities. The shape of this curve provides interpretations of future economic conditions and interest rates.


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Key Takeaways

  1. Reflects Borrowing Costs: The On-the-Run Treasury Yield Curve represents the costs at which the government can currently borrow money. It shows the relationship between interest rates (or cost of borrowing) and the maturity of U.S. Treasury securities at any given time.
  2. Benchmarking Tool: On-the-Run Treasury Yield Curve serves as a benchmark for other debt in the market, such as corporate or municipal bonds. Since U.S. Treasury securities are considered risk-free, they are often used to compare the risks associated with other non-treasury securities.
  3. Economic Indicator: The shape of the On-the-Run Treasury Yield Curve can be a strong signal of future economic expectations. In general, a normal yield curve (upward sloping) suggests that investors expect stable economic growth and inflation. An inverted yield curve (downward sloping), however, is often seen as a signal of a potential economic downturn.


The On-the-Run Treasury Yield Curve is vital in the business and finance sector as it provides a graphical depiction of interest rates on debt for a range of maturities. It serves as a benchmark for pricing, trading, and risk management in fixed-income markets, highlighting the relationship between interest rates and varying debt maturity periods. Moreover, it indicates the borrowing cost of the U.S. government and is thus considered a proxy for risk-free rates. Rapid shifts in this curve can signal economic transitions, such as inflation or recession, making it a crucial tool for investors, economists, and policymakers to understand the economic environment and make strategic decisions.


The On-the-Run Treasury Yield Curve is an essential tool for financial market participants as it serves multiple functions in the world of finance. Its primary purpose is to represent the interest rates of U.S Treasury securities across different maturity periods, which are currently being issued (hence the term ‘on-the-run’). Displayed in a curve graph, the structure serves to illustrate the relationship between interest rates and time to maturity of debt for a hypothetical debtor of risk-free loans. It is a benchmark that provides a reference point for pricing, trading, and risk-management in various financial endeavors. For instance, bond traders often use this yield curve to compare the prices of other fixed-income securities to the current on-the-run Treasury yields. By doing so, they can identify arbitrage opportunities or assess the relative value of different securities. Moreover, the On-the-Run Treasury Yield Curve helps in forecasting future economic activities. Analysts and economists interpret the shape of the curve—whether it’s upward sloping (normal), downward sloping (inverted), or flat—to predict potential shifts in economic trends, including future interest rate movements and economic recessions. Hence, the curve is vital in monetary policy decision-making and investment strategy planning.


The On-the-Run Treasury Yield Curve refers to the relationship or graph plotting the interest rates of U.S. Treasury securities with various maturities that are currently being issued and traded (the most recent, or “on-the-run,” issues). Here are three real world examples:

1. U.S. Government Bond Auction: In July 2021, when the U.S. government auctioned $61 billion in 5-Year Treasury notes, the yield came at 0.713%. This yield became a part of the on-the-run Treasury yield curve, which investors used to make decisions regarding their bond investment strategies.

2. Corporate Bonds Pricing: In January 2020, when AT&T Inc. priced their new bond issue, they likely compared the new bond’s yield to the on-the-run Treasury yield curve to determine the bond’s spread or premium over government securities. This helps in setting competitive yield rates on the new bond issue.

3. Economic Indicators: During the economic decline set off by the COVID-19 pandemic in 2020, the Federal Reserve lowered interest rates. The immediate impact on the on-the-run Treasury yield curve was visible as short-term rates fell significantly. This was a key indicator for many investment analysts in assessing the economic environment and making investment decisions.

Frequently Asked Questions(FAQ)

What is the On-the-Run Treasury Yield Curve?

The On-the-Run Treasury Yield Curve is a graphical representation that shows the interest rates on debt for a sequence of maturities. On-the-run securities are the most recently issued US Treasury bonds or notes of a particular maturity.

How is the On-the-Run Treasury Yield Curve constructed?

The curve is constructed by using the most recent (on-the-run) U.S. Treasury issuances, including treasury bills, notes, and bonds. The y-axis contains the yield and the x-axis lists the various maturities of bonds.

Why is the On-the-Run Treasury Yield Curve important in finance and business?

The On-the-Run Treasury Yield Curve is important because it gives the most accurate indication of current interest rates. It’s critical for forecasting interest rate movements, pricing fixed-income securities, and developing strategies for interest rate risk management.

What does it mean when the On-the-Run Treasury Yield Curve is steep?

When the curve is steep, it typically means that long-term interest rates are substantially higher than short-term rates. This can reflect investors’ optimistic expectations about future economic growth and inflation.

What does it mean when the On-the-Run Treasury Yield Curve is inverted?

An inverted yield curve occurs when short-term interest rates exceed long-term rates. This is generally seen as a sign of an impending economic downturn, as it shows investors’ pessimistic expectations about the economy.

How regularly is the On-the-Run Treasury Yield Curve updated?

The Treasury Yield Curve is updated regularly, typically once a day. The information reflects the most recently issued treasury bonds of varying maturities.

Where can I find the most up-to-date On-the-Run Treasury Yield Curve?

The U.S. Department of the Treasury website updates and posts the current On-the-Run Treasury Yield Curve regularly. Financial news sources and investment research tools also provide this information.

Who uses the information from the On-the-Run Treasury Yield Curve?

A wide range of market participants use this information, including banks, investment managers, brokers, traders, and analysts. It’s also important for policymakers for setting and evaluating monetary policy.

Related Finance Terms

  • U.S. Treasury Bonds: These are fixed-interest government debt securities with a maturity of more than 10 years. The U.S. Department of the Treasury issues them to fund federal government operations.
  • Yield Curve: A line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates.
  • Maturity: The length of time until the principal amount of a bond is repaid. In relation to the yield curve, bonds are typically sorted by their maturity dates.
  • Spot Rate: The current interest rate that a particular bond or security can be bought or sold for immediate delivery and payment. Often used in the On-the-Run Treasury Yield Curve.
  • Off-the-Run Treasuries: These are more seasoned bonds that are less liquid and have slightly higher yields than the newer on-the-run treasuries due to their decreased demand.

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