A swap rate is the market rate on the fixed-rate leg of a swap. This rate is paid by the fixed-rate payer to the floating rate payer. The fixed rate on a swap consists of a Treasury component and a spread component:

Swap rate = Treasury rate + spread

• Treasury component: it is the yield on the comparable Treasury note (T-note) or bond (T-bond) prevailing in the live Treasury market. For instance, for a 5-year swap the yield on the 5-year Treasury is used. The Treasury component undergoes no credit or quality problems. It is the varying part of the swap rate because the Treasury rate is, by nature, an ever-changing variable that is linked to market movements.
• Spread component: It is the swap quote offered by a swap desk. Each swap desk may quote a different spread. Typically, the shorter the swap term (swap tenor), the lower the spread and vice versa (of course, in a normal yield curve environment). If a yield curve is inverted (inverted yield curve), short-term rates will be higher than long-term rates, resulting in inverted spread curves.