The most reliable recession predictor in financial history. Every US recession since 1950 was preceded by a yield curve inversion. When this chart goes negative, the countdown begins.
US Treasury yield curve spread (10Y-2Y). Negative values indicate inversion, often predicting recession.
Thresholds: Negative ≤-0.3 • Warning ≤0.2 • Positive >0.2
Today's reading sits at the 33rd percentile of 602 months since 1976.
3 years • Current: 0.36 • 3-month change: -0.17 (-32.08%) • Source: FRED T10Y2Y, daily
The yield curve plots interest rates of US Treasury bonds across different maturities. Normally, longer-term bonds pay higher yields. When this relationship flips — short-term rates exceed long-term rates — it signals deep trouble ahead.
The yield curve inverted before the 2001 recession, the 2008 financial crisis, and the 2020 downturn. The average lead time is 12-18 months, giving prepared investors a window to adjust their portfolios.
Yield curve inverted in August 2006. The Great Recession officially began in December 2007 — 16 months later. S&P 500 fell 57%.
Brief inversion in August 2019 preceded the COVID-driven recession by 7 months. While COVID was the catalyst, economic weakness was already building.
The red dashed zero line is the critical threshold. When the blue line drops below zero, the yield curve is inverted. The deeper and longer the inversion, the stronger the recession signal. After un-inverting, the recession typically arrives within months.
The 10Y-2Y spread crossing zero is the one event on this site worth knowing the day it happens. One email a week, only when the composite score moved, with the current spread and the other five indicators alongside it.
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Every formula, source series and threshold behind these numbers
Yield curve data sourced from the Federal Reserve. For educational purposes only. Not investment advice.