A Constant Maturity Treasury rate, or CMT, is a theoretical yield that the U.S. Treasury calculates each business day by reading fixed points off a curve fitted to the closing prices of actively traded Treasury securities. No bond, note, or bill actually carries a CMT yield. The Treasury interpolates what a security with exactly one year, five years, or ten years remaining would yield under current market conditions, and financial institutions treat those rates as standard benchmarks for pricing adjustable-rate mortgages, valuing derivatives, and modeling long-term investment returns.
How the Daily Rate Is Built
The Federal Reserve Bank of New York collects indicative closing bid prices on the most recently auctioned Treasury securities each business day at roughly 3:30 PM Eastern.1U.S. Department of the Treasury. Interest Rate Statistics Those prices become the raw inputs. The Treasury converts them to yields and runs them through a mathematical model called the monotone convex method, which replaced the prior interpolation approach in December 2021.2U.S. Department of the Treasury. Yield Curve Methodology Change Information Sheet
The method bootstraps forward rates at each input maturity so every security is priced without error, then interpolates forward rates between those points to build what the Treasury calls a “true par curve.”2U.S. Department of the Treasury. Yield Curve Methodology Change Information Sheet CMT yields are read directly from that curve at fixed maturity points. Because the curve is rebuilt every business day, each rate reflects that day’s market pricing for that exact time horizon.
The nominal maturities the Treasury currently publishes are 1, 1.5, 2, 3, 4, and 6 months, plus 1, 2, 3, 5, 7, 10, 20, and 30 years.3U.S. Department of the Treasury. Daily Treasury Rates
Why a CMT Isn’t a Treasury You Can Buy
A standard Treasury security is a tradable instrument with a fixed issue date and a fixed maturity date, and its remaining life shrinks every day. A 10-year note purchased today has nine years left in a year, eight the year after. The yield it trades at reflects that shrinking lifespan.
A CMT rate always represents a fixed time horizon. The 10-year CMT is exactly ten years, every day, because the Treasury recalculates it from the current universe of outstanding debt. You cannot buy a CMT; it exists only as a reference rate read off a curve. As the Treasury’s own FAQ puts it, CMT rates “may not match the exact yield on any one specific security” because they are read from fixed, constant maturity points on the interpolated curve.4U.S. Department of the Treasury. Interest Rates – Frequently Asked Questions
The constant duration is the point. It lets contracts signed months or years apart reference the same standardized benchmark. When a loan document says “the 1-year CMT,” it means the rate for a theoretical security that always has exactly one year left, not the yield on whichever 1-year bill happens to be trading.
Nominal and Real CMT Rates
The Treasury publishes two sets of constant maturity rates. Nominal CMT rates reflect yields without adjusting for inflation. Real CMT rates, sometimes called RCMT rates, are derived from Treasury Inflation-Protected Securities (TIPS) and represent yields after stripping out expected inflation.
Real rates use the same monotone convex interpolation, but the real curve has fewer inputs because TIPS are issued less often.2U.S. Department of the Treasury. Yield Curve Methodology Change Information Sheet Real CMTs are published at five points only: 5, 7, 10, 20, and 30 years.3U.S. Department of the Treasury. Daily Treasury Rates
The gap between a nominal CMT and the real CMT at the same maturity is the “breakeven inflation rate.” If the 10-year nominal CMT is 4.3% and the 10-year real CMT is 2.0%, the market is pricing in roughly 2.3% average annual inflation over the next decade. Investors and policymakers watch these breakeven rates as a real-time gauge of inflation expectations.
CMT Rates and Adjustable-Rate Mortgages
The 1-year CMT is one of the primary benchmarks lenders use to set the interest rate on adjustable-rate mortgages. For FHA-insured ARMs, the approved indices are the 1-year CMT and the Secured Overnight Financing Rate. HUD formally replaced LIBOR with SOFR as an approved index in 2023 after LIBOR’s discontinuation.5Federal Register. Adjustable Rate Mortgages: Transitioning From LIBOR to Alternate Indices
The math is straightforward. Your lender sets a fixed margin at application, and it never changes after closing. At each adjustment, the lender adds that margin to the current index value. If the 1-year CMT is 4.25% and your margin is 2.75%, your fully indexed rate is 7.00%.6Consumer Financial Protection Bureau. For an Adjustable-Rate Mortgage (ARM), What Are the Index and Margin, and How Do They Work? Margins vary between lenders and are negotiable, so shopping on margin alone can change your long-term cost.
Rate caps limit how much your rate can move at any adjustment and over the life of the loan. Most ARMs carry three layers of protection:7Consumer Financial Protection Bureau. What Are Rate Caps with an Adjustable-Rate Mortgage (ARM), and How Do They Work?
- An initial adjustment cap on the first rate change after the fixed period ends, commonly two or five percentage points.
- A subsequent adjustment cap on each later change, most commonly one or two percentage points.
- A lifetime cap on total movement, most commonly five percentage points from the initial rate in either direction.
When the CMT index spikes, these caps prevent your payment from jumping the full amount at once. The uncapped portion can carry forward, though, so a sharp index rise may result in several consecutive rate hikes until the fully indexed rate is reached or the lifetime cap kicks in.
Other Places CMT Rates Show Up
Beyond mortgages, CMT rates appear wherever the financial system needs a standardized, government-backed reference. Commercial loans and home equity lines of credit frequently tie floating rates to a specific CMT maturity. Interest rate swaps, caps, and floors use CMT rates as one proxy for the risk-free rate when pricing contracts and managing counterparty exposure. The IRS also references the 30-year Treasury constant maturity rate in its weighted average interest rate tables used for certain pension funding calculations.8Internal Revenue Service. Weighted Average Interest Rate Table
Portfolio managers and corporate finance analysts use CMT rates as inputs to discounted cash flow models. The 10-year CMT commonly serves as the risk-free rate when calculating net present value on long-term projects or estimating a company’s cost of capital. Because rates are published daily across maturities from one month to thirty years, analysts can match the discount rate to whatever time horizon they’re valuing.
CMTs and the Treasury Yield Curve
Plotting the CMT rates from shortest to longest maturity on a single chart produces the Treasury yield curve, one of the most watched indicators in economics. Its shape tells you how the market views lending short versus long.
Three shapes dominate the discussion. A normal, upward-sloping curve has longer-term CMTs above shorter-term ones and reflects steady growth expectations with moderate inflation. A flat curve has short and long rates sitting close together, often during uncertainty or transitions between economic phases. An inverted curve has short-term rates above long-term ones, which draws attention because of its track record as a recession signal.
The spread between the 2-year and 10-year CMT is the most commonly tracked measure of curve shape. The Federal Reserve Bank of St. Louis publishes it as a standalone series (T10Y2Y) going back to 1976.9Federal Reserve Bank of St. Louis. 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) Research from the Federal Reserve Bank of Chicago found that the slope has turned negative before each U.S. recession since the 1970s, with one false positive in the mid-1960s when an inversion was not followed by a recession.10Federal Reserve Bank of Chicago. Why Does the Yield-Curve Slope Predict Recessions? The lag between inversion and recession has varied from a few months to more than a year.
Where to Find the Rates
The Treasury publishes current and historical CMT rates on its Daily Treasury Rates page, updated each business day.3U.S. Department of the Treasury. Daily Treasury Rates The Federal Reserve Board publishes the same data through its H.15 Selected Interest Rates release, posted at 4:15 PM Eastern on days the Board is open.11Board of Governors of the Federal Reserve System. Selected Interest Rates (Daily) – H.15 For charting, custom date ranges, or API access, the St. Louis Fed’s FRED platform carries the series through the Board’s Data Download Program. Whichever source you use, the underlying data comes from the same Treasury interpolation process, so the rates themselves are identical.