USMacroBETA

Yield Curve (10yr – 2yr Spread)

Neutral
CURRENT VALUE
0.32%
Source: US Treasury / Federal Reserve via FRED
Data through: Sep 14, 2026 · updated Sep 15 · Updates: Daily (market days)
The three bars show the last 3 weeks for this indicator, oldest left to newest right. Bar height reflects each reading relative to the other two — the tallest is the highest of the three, the shortest the lowest.
Historical context: Currently in the 31th percentile of all historical readings.
What this means right now: The yield curve is flattening toward zero — a caution signal. The economy may be losing momentum. Watch for whether the curve steepens (growth accelerating) or continues flattening toward inversion (slowdown ahead).
Yield Curve (10yr – 2yr Spread) · Daily · 1976–2026
Grey areas = NBER recessions · Scroll to read · zoom and pan in Expand
Monthly values

Yield Curve (10yr – 2yr Spread) — the last 12 months

Every month's reading, with the band the heatmap gives it. The chart above shows the same series in full.

MonthValueBand
Sep 20260.32%Within normal range
Aug 20260.41%Within normal range
Jul 20260.47%Within normal range
Jun 20260.30%Within normal range
May 20260.47%Within normal range
Apr 20260.52%Healthy reading

Month-end readings of the same series the chart shows, from yield_curve. Values are the current record, not point-in-time: a month that has since been revised shows its revised value.

What is the Yield Curve?

The yield curve spread measures the difference between the 10-year US Treasury yield and the 2-year Treasury yield. A positive spread (10yr > 2yr) is "normal" — investors demand higher yield for lending money for longer. A negative spread (10yr < 2yr), called an "inverted yield curve," means short-term rates exceed long-term rates — an abnormal condition that has preceded every US recession in the modern era.

The yield curve is perhaps the most powerful recession predictor available to investors. When the Fed raises short-term rates aggressively (pushing 2yr yields up) while long-term inflation expectations fall (keeping 10yr yields down), the curve inverts. This inversion signals that the market expects the Fed to eventually cut rates — which historically happens because the economy slows into recession. The average lead time from yield curve inversion to recession onset has been approximately 12-24 months.

How We Color-Code the Yield Curve

Our heatmap colors each indicator based on historically significant thresholds:

Above +1.5%
Steep — strong growth signal, healthy expansion expected
+0.5% to +1.5%
Normal — healthy yield curve, modest growth expected
0% to +0.5%
Flat — slowing growth, watch for inversion
-0.5% to 0%
Slightly inverted — recession warning, historically reliable
Below -0.5%
Deeply inverted — strong recession warning, 100% hit rate historically

Historical Extremes — What Happened Next?

When this indicator reaches extreme levels, history shows consistent patterns:

2022-2023Deepest Inversion Since 1981
-0.50%
The deepest yield curve inversion in 40 years — preceded by 12-24 months the expected economic slowdown. Recession was delayed by unusual fiscal stimulus but labor market eventually weakened.
2006-2007Pre-Financial Crisis Inversion
-0.05%
Yield curve inverted in 2006 — recession began December 2007, approximately 18 months later. A textbook example of the curve's predictive power.
2021Post-COVID Steepening
1.01%
The steepest yield curve since 2015 — reflecting strong growth expectations as the economy reopened and before the inflation surge triggered aggressive Fed hikes.

Investor Checklist — Current Reading

Based on the current Yield Curve reading of 0.32% (Neutral):

⚠Flattening curve — growth slowing, begin reducing cyclical exposure
✓Shift toward more defensive sector balance
⚠Watch for inversion — if curve crosses zero, recession warning becomes active

Frequently Asked Questions

Has the yield curve predicted every US recession?
Yes — the 10-year minus 2-year yield curve has inverted before every US recession in the modern era (since the 1970s) with no false positives in that timeframe. The average lead time from inversion to recession onset has been approximately 12-24 months. The 2022-2023 inversion has not yet produced a declared NBER recession, potentially extending the record.
Why does an inverted yield curve predict recessions?
When the Fed raises short-term rates aggressively to fight inflation, 2-year yields rise sharply. Long-term yields (10-year) are anchored by long-term growth and inflation expectations, which fall as the market anticipates the Fed will eventually cut rates as the economy slows. The inversion signals the market expects recession — and that expectation itself contributes to the outcome as banks reduce lending (unprofitable when borrowing short at high rates and lending long at lower rates).
Is the yield curve still reliable, or have "this time it's different" arguments become credible?
The "this time it's different" argument appears at every inversion. While the 2022-2023 inversion has not yet produced an official recession (as of early 2026), it has produced significant economic slowing and a weakening labor market. Most economists consider the jury still out — the record remains intact until NBER confirms no recession occurred.
What happens to bonds when the yield curve steepens after inversion?
When the yield curve steepens back toward zero (un-inverts), it does NOT signal that recession danger has passed — it often signals that recession is imminent. The steepening occurs because the Fed begins cutting rates (short-term rates fall faster than long-term rates). Historically, the actual recession and worst equity market performance often occurs during the un-inversion, not during the inversion itself.
What does a steep yield curve mean for bank stocks?
Banks profit by borrowing at short-term rates (deposits and interbank lending) and lending at long-term rates (mortgages and business loans). A steep yield curve (wide spread) means banks earn large net interest margins — highly profitable. An inverted curve means banks earn negative or minimal margins, which reduces lending and profits. This is why bank stocks are so sensitive to yield curve shape.