Cash has spent several years winning the income argument by default. The Treasury curve now makes that decision less automatic.
On August 3, the one-year Treasury constant-maturity yield was 4.07%. The five-year yielded 4.40%, the 10-year 4.70%, and the 30-year 5.23%, according to the Federal Reserve’s latest H.15 release. For the first time in a while, moving beyond short bills offers visibly more income rather than less.
That does not mean the longest bond is the best bond. It means investors are again being paid to separate three questions that the inverted curve allowed them to avoid: when the money will be needed, how much interim price movement is tolerable, and which risks the income allocation is supposed to offset.
The curve changed the question
When short-term rates exceeded longer-term yields, cash was unusually persuasive. Investors could preserve liquidity, avoid much of the price sensitivity of longer bonds, and still collect a competitive yield. The trade-off was reinvestment risk: every bill eventually matures, and the next available rate may be lower.
The current curve pays more for time. From one year to 10 years, the yield pickup is 63 basis points. From 10 years to 30 years, it is another 53 basis points. Those are real differences, but they are not equivalent decisions.
| Maturity | Yield | Pickup vs. 1-year |
|---|---|---|
| 1 year | 4.07% | — |
| 2 years | 4.25% | +18 bp |
| 5 years | 4.40% | +33 bp |
| 10 years | 4.70% | +63 bp |
| 30 years | 5.23% | +116 bp |
Source: Federal Reserve H.15, release dated August 4, 2026. Constant-maturity yields for August 3.
Yield is not the same thing as certainty
A Treasury held to maturity has a known principal payment, subject to the credit of the United States. A Treasury sold before maturity has a market price, and that price moves as prevailing yields change. The longer the bond, the greater that sensitivity generally becomes.
This distinction is easy to dismiss when the account statement is rising. It matters when money is needed at an inconvenient time. A 30-year bond may be a sensible asset against a genuinely long liability. It is a poor substitute for cash that could be needed for a home purchase, tax payment, medical expense or the first years of retirement.
The extra 53 basis points from the 10-year to the 30-year maturity therefore deserve a different standard than the 63 basis points available from one year to 10 years. The first stretch can help an investor lock in income across a practical planning horizon. The second is a deliberate duration position.
The middle of the curve has regained a job
The most useful part of the curve is not necessarily the highest point. For many households, two- through seven-year maturities can connect near-term reserves with longer-term portfolio assets.
That middle segment now yields between 4.25% and 4.54%. It offers more income than the one-year Treasury while allowing maturities to be aligned with known spending dates. A ladder can divide the allocation among several maturity years so that part of the portfolio regularly returns to cash without forcing the entire position to be reinvested at one future rate.
A ladder is not a forecast. That is its advantage. If rates fall, the longer rungs preserve yields that are no longer available. If rates rise, the shorter rungs mature and can be reinvested at higher levels. The structure accepts that the future path of rates is unknowable and makes the portfolio less dependent on getting one date right.
Real yields deserve a separate look
The same H.15 release put the five-year real TIPS yield at 2.17%, the 10-year at 2.43%, and the 30-year at 2.99%. These are yields above the inflation adjustment built into Treasury Inflation-Protected Securities, not forecasts of nominal returns.
For investors whose primary concern is future purchasing power, the 10-year real yield may be more decision-useful than the 10-year nominal yield. TIPS principal adjusts with inflation and, at maturity, Treasury pays the greater of the adjusted or original principal. The trade-off is that TIPS prices can still fluctuate before maturity, and taxable-account owners must understand the annual federal tax treatment of inflation adjustments.
Treasury interest is subject to federal income tax but exempt from state and local income tax. That can improve the after-tax comparison for residents of high-tax states, although the relevant result depends on the investor, account type and alternative security. A quoted yield should never be confused with an after-tax yield.
A three-bucket way to read the curve
Liquidity bucket: zero to one year. This is money with a job soon—emergency reserves, taxes, a planned purchase or near-term retirement withdrawals. Its purpose is availability, not maximum yield.
Planning bucket: two to seven years. This is where the curve now offers a clearer reward for committing time. The maturity dates can be matched to known spending or used to create a rolling ladder. It is the part of the curve where income and flexibility can still coexist.
Strategic-duration bucket: 10 years and beyond. This allocation should have an explicit reason: a long-dated liability, a desire to lock a real yield, or a portfolio hedge against a substantial decline in interest rates. “The yield is higher” is not, by itself, a complete reason.
What the labor data do—and do not—say
Tuesday’s JOLTS report showed 7.4 million job openings in June, with hires at 5.3 million, quits at 3.2 million and layoffs at 1.8 million. All were little changed. That is not evidence of an acute labor-market break demanding an immediate collapse in short rates.
It also is not a promise that rates will stay high. The labor data are stable, not static, and inflation, fiscal supply and risk premiums all affect the long end of the Treasury market. The lesson is narrower: building an income plan around a single near-term rate-cut forecast remains unnecessary.
The Log: match the maturity to the obligation
The headline number is 5.23% on the 30-year Treasury. The decision-useful number may be 4.40% on the five-year, 4.70% on the 10-year, or 2.43% above inflation on the 10-year TIPS.
The correct comparison begins with the date of the liability. Money needed next year should not be asked to behave like a 30-year asset. Money intended for the 2030s should not remain permanently exposed to the next bill auction simply because cash felt comfortable during an inverted curve.
Cash has not become unattractive. It has lost its monopoly on attractive yield. That is enough to make maturity structure worth reviewing again.
What would change the view
- A renewed inversion that removes the income advantage of extending maturity.
- A material deterioration in labor data that changes the likely path of short rates.
- A sharp rise in long-term inflation compensation or Treasury term premiums.
- A change in the investor’s spending horizon, tax position or need for liquidity.
Jasper Kellan is editor of The Perspective Log. This article is general information, not personal investment, tax or legal advice.
Primary sources: Federal Reserve H.15, Selected Interest Rates, August 4, 2026; U.S. Bureau of Labor Statistics, Job Openings and Labor Turnover, June 2026; TreasuryDirect, Tax Forms and Tax Withholding; TreasuryDirect, Treasury Inflation-Protected Securities.
