What Happened After the Yield Curve Un-inverted?
The 10Y-2Y yield curve un-inverted in September 2024 after 26 months below zero, and the spread now stands at 0.36%. Since 1976, most un-inversions were followed by a recession within a year or so — 1990, 2001, 2007 and 2020 — but not all: the 1982 un-inversion opened an eight-year expansion.
The evidence
| Inversion | Months below zero | Deepest point |
|---|---|---|
| September 1978 – May 1980 | 20 | -2.14% (March 1980) |
| September 1980 – November 1981 | 14 | -1.36% (May 1981) |
| February 1982 – July 1982 | 5 | -0.40% (February 1982) |
| January 1989 – July 1989 | 6 | -0.32% (March 1989) |
| August 1989 – October 1989 | 2 | -0.09% (September 1989) |
| February 2000 – January 2001 | 11 | -0.41% (April 2000) |
| February 2006 – April 2006 | 2 | -0.10% (February 2006) |
| June 2006 – April 2007 | 10 | -0.15% (November 2006) |
| July 2022 – September 2024 | 26 | -0.93% (July 2023) |
What followed each un-inversion since 1976: 1980 — the recession it signalled was already underway, and the recovery lasted about a year before the 1981 downturn; 1982 — no recession for eight years, the great 1980s expansion; 1989 — recession from July 1990; 2000 — recession from March 2001; 2007 — recession from December 2007; 2019 — recession from February 2020, three months later, driven by a pandemic rather than anything the curve could see. The live chart is on the yield curve page.
The caveat
Why this answer is not a forecast, and never will be.
The record cuts both ways. Most un-inversions since 1976 preceded recessions, but the 1982 un-inversion preceded an eight-year expansion — and the brief 1998 inversion, too short to appear as a sustained episode, resolved with no recession at all. The 2020 recession, meanwhile, was triggered by a pandemic: an outside shock the curve cannot plausibly have foreseen.
The signal speaks to conditions, not dates. The lag between un-inversion and recession has ranged from three months to over a year, and equity returns over those windows were not uniformly negative.
The strongest argument against treating any of this as a forecast is on the market analogs page: the historical months that most closely match today’s conditions were followed by both strong and poor S&P 500 returns. Nearly identical setups have preceded opposite outcomes, and any page that tells you otherwise is selling certainty it does not have.
Related reading
More questions, answered live
The current reading against the highest value in the full history of the series.
Every monthly reading above 40 in the full CAPE history, and what followed.
Both long-run valuation yardsticks ranked against their entire recorded history.
The last month real rates stood at or above today’s reading, from the full series.
Computed from public data for educational purposes only. Not investment advice. Past patterns do not guarantee future results.