PRICE-YIELD LAW
Price and yield move inversely. A bond's price is the present value of fixed cash flows:
P = Σ C/(1+y)t + F/(1+y)T
Raise the discount rate y and every term shrinks, so P falls. Longer maturity means more far-away cash flows, hence more rate sensitivity — that is duration. Try the +100bp line above at 2Y vs 30Y.
CURVE SHAPES DECODED
Normal (upward): investors demand a term premium for lending longer; consistent with expected growth.
Flat: transition state — policy tightening meets softening long-run expectations.
Inverted: short rates above long rates; markets pricing future rate cuts.
Steep: typically early-cycle, after aggressive easing.
INVERSION AS A SIGNAL
An inverted curve (10Y yield below 3M or 2Y) has preceded every US recession since the late 1960s, usually by 6-24 months, with 1966 commonly cited as the lone false alarm. It is a warning light, not a timer — and the 2022-2024 inversion showed the lag can stretch. Watch 2s10s and 3M10Y.
WHY A TREASURY DASHBOARD — ASSET SWAPS & IG ANALYSIS
Asset swap: pair a fixed-coupon bond with an interest-rate swap to convert it into a floating-rate position; the asset-swap spread isolates the bond's credit/liquidity premium over the swap curve — a cleaner rich/cheap gauge than raw yield.
Investment-grade (IG) analysis: IG corporates (rated BBB-/Baa3 or better) are quoted as a spread over Treasuries. The Treasury curve is the risk-free backbone: corporate yield = matched-maturity UST yield + credit spread. Widening spreads with an unchanged curve means credit stress, not rate moves — a distinction only visible when you model both, which is exactly what a curve dashboard like this one does.