http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield_historical.shtml It looks like when the 30-year treasury bond gets to around 4%, that the 20-year yield starts to become higher than the 30-year yield. This is especially obvious when the yields dropped down to close to 2.5. The 20 year yields were over 30 basis points higher. The spread between T-Bill up to 20-yields is normal but it somehow inverts between 20-30. Is there a reason for this inversion between the 20 and 30 yields? Also, does anyone know what happens to the curve in between the 20 and 30 when this happens? Does the yields of 20 > 21 > 22 > ... > 29 > 30 or what? Thanks.
There's greater tradable supply at the "longer" end of the curve that has been bid-up slightly because of excessive speculation.
It's related to the various phenomena discussed here (exotics hedging flows, etc): http://www.elitetrader.com/vb/showthread.php?s=&threadid=112244&perpage=6&pagenumber=290