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Yield Curve Inversion — 10-2 Year Treasury Spread

An inversion of the yield curve came before every US recession since 1950. When this chart goes below zero, short-term Treasuries pay more than long-term ones.

Yield Curve

US Treasury yield curve spread (10Y-2Y). Negative values indicate inversion, often predicting recession.

Thresholds: Negative ≤-0.3 • Warning ≤0.2 • Positive >0.2

POSITIVE

Today's reading sits at the 31.6th percentile of 604 months since 1976.

What followed the last times →
Current Value
0.31%
3-month Change
-0.05 pp
3-month % Change
-13.89%

Why this can crash the market

Banks borrow short and lend long. When short rates sit above long rates, that business loses money and lending slows. Credit is what the US economy runs on: companies that cannot roll over debt cut investment first, then jobs, then earnings. Falling earnings reprice every stock. This signal came before every US recession since 1950, but it never says when.

Historical Data

The last three years • Source: FRED T10Y2Y, daily

Yield Curve Spread
0.31Oct 23, 2026
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Buffett IndicatorNEGATIVE
230%
3-month change: +5.00 pp (+2.22%)

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Shiller PE RatioNEGATIVE
40
3-month change: -0.64 (-1.56%)

Cyclically Adjusted PE Ratio (CAPE). Measures stock market valuation relative to 10-year average earnings. High values indicate overvaluation.

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US Dollar Index (DXY)WARNING
101.81
3-month change: +0.34 (+0.34%)

Measures the value of the US dollar against a basket of major currencies. For growth analysis, lower DXY change indicates better conditions for market growth.

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What Is the Yield Curve?

The yield curve plots US Treasury rates across maturities. Longer bonds normally pay more. When short-term rates go above long-term rates, the curve is inverted.

The 10Y-2Y Spread

  • Spread = 10-Year Treasury Rate - 2-Year Rate
  • Normal spread: 1-3% (positive, healthy)
  • Flat curve: 0-0.5% (slowdown warning)
  • Inverted: Below 0% (recession signal)

Why Inversion Matters

  • Banks borrow short-term, lend long-term
  • Inversion crushes bank profit margins
  • Credit tightens, lending slows down
  • Economic slowdown follows within 12-18 months

The Signal Before Every Recession Since 1950

The curve inverted before the 2001 recession, the 2008 financial crisis and the 2020 downturn. The average lead time was 12 to 18 months.

What followed the last times →

2006 Inversion → 2008 Crisis

The curve inverted in August 2006. The Great Recession began in December 2007, 16 months later. The S&P 500 fell 57%.

2019 Inversion → 2020 Recession

A short inversion in August 2019 came 7 months before the COVID recession. COVID was the trigger, but the economy was already weakening.

How to Read This Chart

The red dashed line marks zero. When the blue line falls below it, the curve is inverted. A deeper and longer inversion is a stronger signal. In past cycles the recession came within months after the curve returned above zero.

Get told when the curve crosses

When the 10Y-2Y spread changes status or moves 2% in a week, it shows up in the email, next to the crash-risk and growth scores. At most one email a week.

At most one email a week, and only in weeks something actually moved. No account, one click to unsubscribe, and the address is never shared.

Daily Stock Screeners

The same market, one company at a time: which S&P 500 stocks sit at their highs or lows, are oversold, trade under 15 times earnings or below book value today.

All screeners →

Below 200-Week MA

144 / 495

Constituents whose latest weekly close sits under the simple average of the last 200 weekly closes.

FMC LULU ENPH CHTR …

Down 50% From 5-Year High

62 / 495

Constituents trading at half or less of their highest weekly close of the last five years.

FMC ENPH CHTR ARE …

Near 52-Week Low

19 / 495

Constituents whose latest weekly close sits within 5% of their lowest weekly low of the past year.

TMUS WYNN APP CMG …

10-Year High Dividend Yield

0 / 495

Dividend payers whose current yield is the highest reading of their own ten-year history.

Below Book Value

14 / 495

Constituents whose share price sits under the accounting value of their net assets.

FMC ARE MOS LKQ …

Near 52-Week High

33 / 495

Constituents whose latest close sits within 2% of their highest weekly high of the past year.

TECH CVX PAYC HAS …

Oversold: RSI Under 30

6 / 495

Constituents whose 14-week relative strength index has fallen under 30 after a run of weekly losses.

MGM FMC WYNN LKQ …

P/E Under 15

87 / 495

Profitable constituents priced at less than 15 times their trailing twelve-month earnings.

CHTR ALL BBWI AES …

Explore Related Indicators

Buffett Indicator

Market cap to GDP — Warren Buffett's favorite valuation metric

Shiller PE Ratio

CAPE ratio — 10-year smoothed market valuation

US Dollar Index

DXY tracking the strength of the US dollar

Money Supply (M2)

M2 money supply growth — liquidity driving asset prices

Real Interest Rates

Inflation-adjusted rates driving borrowing costs

Fear and Greed Index

Market sentiment from volatility, credit spreads, momentum and safe-haven demand

Methodology

Every formula, source series and threshold behind these numbers

Yield curve data sourced from the Federal Reserve. For educational purposes only. Not investment advice.