Spot Rate Treasury Curve

Most often, those in the bond market are paying attention to the yield curve, which shows you the yields you can get from different lengths of bonds. In a normal market, longer bonds will have greater yields than shorter length bonds, since you’re letting the government borrow money from you for a longer period of time.

Step aside, yield curve...the spot rate Treasury curve is in town. The spot rate Treasury curve is like the yield curve, but swap out yields with the spot price. It’s a graph that shows you the current costs (spot prices) of different length bonds (short, medium, long) on the market.

If you’re the one selling the Treasury bond, you can use the spot rate Treasury curve to help you price your bonds for the market. As a bond buyer, it’ll map out current spot rates for you.

If you do check out a spot rate Treasury curve, make sure you note whether it includes on-the-run treasuries, or off-the-run treasuries. On-the-run treasuries are the hot young things...just off the press, the latest batch of treasuries being sold on the market. Off-the-run treasuries are the older batches, including the batch that was the hot young batch...until the newer batch stole its thunder.