US Yield Curve (10Y-2Y) — Historical Chart
T10Y2YThe 10Y–2Y yield curve spread is the classic recession predictor. When it inverts (goes negative), it has preceded every U.S. recession in the past 50 years. Tracks the tension between short-run Fed policy and long-run growth expectations.
Related — Monetary Policy & Interest Rates
SOURCE: FEDERAL RESERVE ECONOMIC DATA (FRED) · 0 OBSERVATIONS
The 10Y-2Y Treasury spread is the most widely tracked recession predictor. When it turns negative (inverts), short-term rates exceed long-term rates — a signal that markets expect the Fed to cut rates ahead due to economic weakness. It has inverted before every US recession since 1968.
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Frequently Asked Questions
- What is yield curve inversion?
- Yield curve inversion occurs when short-term Treasury yields exceed long-term yields — specifically when the 2-year yield rises above the 10-year. It is widely viewed as a recession warning signal, having preceded every US recession since 1968.
- Why does an inverted yield curve predict recessions?
- An inverted yield curve reflects markets pricing in future Fed rate cuts. The Fed typically cuts rates in response to economic weakness. So inversion signals that bond markets — which aggregate the most informed investors in the world — expect significant economic deterioration ahead.
- How long after inversion does recession occur?
- Historically, recession has followed inversion with a lag of 6 to 24 months. The yield curve re-steepens (disinverts) when the Fed actually begins cutting rates — which often coincides with or immediately precedes the formal start of recession.
- Is yield curve inversion a perfect recession predictor?
- No indicator is perfect. The yield curve gave a brief false signal in 1966 with no subsequent recession. It also has long and variable lead times, making timing difficult. Most economists treat prolonged inversion (3+ months) as more meaningful than brief inversions.
Economic data sourced from the Federal Reserve Bank of St. Louis (FRED). Data is updated according to the release schedule of the issuing agency. Provided for informational purposes only and does not constitute investment advice.