Visualizing the Interest Rates of U.S. Treasury (2020–2025)
U.S. government borrowing costs have steadily climbed over the past five years, reflecting a broader shift in monetary policy aimed at combatting inflation. According to data from the U.S. Department of the Treasury and the Federal Reserve, the average interest rate on marketable Treasury debt reached 3.35% in February 2025, marking a significant increase from 1.42% in early 2022.
This upward trend in Treasury yields has been closely tied to the Federal Reserve’s aggressive rate hikes, which began in 2022 to curb soaring inflation. Short-term Treasury bills (T-bills) have seen the most notable increases, with yields peaking at 5.45% in late 2023 before slightly declining to 4.40% in February 2025.
Key Takeaways:
- Steady Increase in Treasury Yields: U.S. Treasury interest rates climbed from 1.42% in early 2022 to 3.35% in February 2025.
- Impact of Federal Reserve Policies: Aggressive rate hikes since 2022 drove up short-term T-bill yields, peaking at 5.45%.
- Higher Debt Servicing Costs: U.S. government borrowing costs rose significantly, with average interest rates surpassing pre-pandemic levels.
- Duration Sensitivity: Long-term Treasurys faced greater challenges due to their sensitivity to rising interest rates compared to T-bills.
- Economic Barometer: Treasury yields reflect broader economic conditions, inflation expectations, and investor sentiment.
Below, we explore the evolution of U.S. Treasury interest rates and the federal funds rate from February 2020 to February 2025, using data-driven insights to visualize how borrowing costs have changed across different types of government debt instruments.
Why Treasury Yields Matter
Treasury yields are a critical barometer of economic conditions and government borrowing costs. When yields rise, it signals higher returns for investors purchasing U.S. government debt but also increases the expense for the federal government to finance its obligations.
The interest rates on Treasury securities—bills, notes, bonds, and Treasury Inflation-Protected Securities (TIPS)—vary depending on their duration and market conditions. Short-term T-bills tend to follow the federal funds rate closely, while longer-duration securities like bonds and notes are influenced by broader economic trends, inflation expectations, and investor sentiment.
A Snapshot of U.S. Treasury Yields (2020–2025)
The table below outlines the average interest rates on marketable U.S. Treasury securities across different categories—Treasury bills, bonds, TIPS, and notes—alongside the federal funds rate from February 2020 to February 2025:
| Date | Total Marketable (%) | Bills (%) | Bonds (%) | TIPS (%) | Notes (%) | Federal Funds Rate (%) |
|---|---|---|---|---|---|---|
| 2020-02-29 | 2.32 | 1.64 | 3.80 | 0.74 | 2.13 | 1.58 |
| 2020-06-30 | 1.75 | 0.33 | 3.66 | 0.72 | 1.99 | 0.08 |
| 2021-01-31 | 1.54 | 0.11 | 3.36 | 0.59 | 1.71 | 0.09 |
| 2021-06-30 | 1.47 | 0.05 | 3.21 | 0.52 | 1.52 | 0.08 |
| 2022-01-31 | 1.42 | 0.10 | 3.02 | 0.43 | 1.40 | 0.08 |
| 2022-06-30 | 1.69 | 1.07 | 3.00 | 0.42 | 1.49 | 1.21 |
| 2023-01-31 | 2.43 | 4.24 | 3.02 | 0.53 | 1.75 | 4.33 |
| 2023-06-30 | 2.79 | 5.12 | 3.04 | 0.56 | 1.97 | 5.08 |
| 2024-01-31 | 3.21 | 5.41 | 3.11 | 0.65 | 2.34 | 5.33 |
| 2024-06-30 | 3.34 | 5.35 | 3.16 | 0.72 | 2.59 | 5.33 |
| 2025-01-31 | 3.34 | 4.46 | 3.24 | 0.79 | 2.89 | 4.33 |
| 2025-02-28 | 3.35 | 4.40 | 3.24 | 0.80 | 2.93 |
Which U.S. Treasury Has the Highest Yield?
Among all Treasury securities, short-term T-bills consistently registered the highest yields during this period, closely tracking movements in the federal funds rate set by the Federal Reserve. By early 2025, T-bill yields stood at an average of 4.40%, significantly higher than longer-term bonds (3.24%) and TIPS (0.80%).
The rise in T-bill yields can be attributed to the Federal Reserve’s tightening monetary policy, which began in earnest in early 2022 to combat inflationary pressures following pandemic-era stimulus measures and supply chain disruptions.
Impact of Federal Reserve Rate Hikes
The federal funds rate—a benchmark interest rate influencing borrowing costs across the economy—played a pivotal role in driving up Treasury yields between mid-2022 and early 2025:
- Early Pandemic Era (2020–2021): During the pandemic’s peak, the Federal Reserve slashed rates to near-zero levels (0–0.25%) to stimulate economic activity amid widespread lockdowns and uncertainty.
- Inflation Surge and Policy Tightening (2022–2023): As inflation climbed to multi-decade highs in late 2021 and early 2022, the Federal Reserve began raising rates aggressively, reaching a peak of 5.33% by mid-2024.
- Moderation in Borrowing Costs (2025): By early 2025, the federal funds rate had eased slightly to 4.33%, reflecting signs of cooling inflation and slowing economic growth.
Rising Costs for U.S Government Debt Servicing
The increase in Treasury yields has had substantial implications for U.S. government debt servicing costs:
- Higher Borrowing Costs: As yields rise, new debt issuance becomes more expensive, resulting in higher interest payments for newly issued securities.
- Refinancing Challenges: Existing debt that matures must often be refinanced at higher rates, further increasing overall debt servicing costs.
In early February 2025, total marketable U.S debt carried an average interest rate of 3.35%, up significantly from pre-pandemic levels of around 1–2%.
Treasury Under Pressure: A Challenging Year for Investors
In addition to rising yields, long-duration Treasury faced significant challenges in recent years due to their sensitivity to interest rate changes:
- In 2024, long-duration Treasury (20+ years) were among the worst-performing asset classes globally, with an annual return of -11.7%, according to Bloomberg data.
This decline highlights how rising rates disproportionately affect longer-term securities compared to shorter-term instruments like T-bills.
Conclusion: A Data-Driven Perspective on Treasury Yields
The visualization of U.S Treasury interest rates from February 2020 to February 2025 underscores how monetary policy shifts have shaped borrowing costs for the federal government and investment returns for market participants alike.
For those new to financial markets, understanding foundational concepts like interest rates is essential for navigating global trends effectively—check out Forex Trading Basics for more insights into market dynamics.
As borrowing costs remain elevated and inflation moderates, all eyes will remain on the Federal Reserve’s next moves and their impact on Treasury yields in the years ahead.
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