US bond key yield curve releases warning signal, Washington era interest rates may be maintained at higher levels for longer.

A key indicator of the US Treasury yield spread has narrowed to its lowest level in a year, as traders increase bets that the Federal Reserve may keep interest rates at higher levels for longer under the leadership of new chairman Kevin Wash. The yield spread between 5-year and 30-year Treasury bonds has narrowed to about 81 basis points, the lowest level since May 2025. This is an important indicator of the premium level that investors demand for holding longer-term US bonds. This trend is mainly driven by selling pressure on short-term US bonds, which are more sensitive to changes in expectations of Federal Reserve policy. As of last Friday's close, the yield spread between 2-year and 30-year bonds has also narrowed to its lowest level since July.