There is more than one yield-curve spread#
The 10-year minus 2-year spread and the 10-year minus 3-month spread answer related but different questions. Constant-maturity data, daily closes, monthly averages and real-time observations should not be mixed without labeling.
A leading indicator is not a countdown clock#
Historical inversions have preceded some downturns with variable lags, while policy, inflation expectations, term premia and market structure change over time. An inversion does not provide a fixed date or complete economic forecast.
The curve reflects several forces#
Short rates are influenced by current policy expectations, while longer yields also reflect expected future rates, inflation uncertainty and term compensation. A single spread cannot identify which force dominates.
Sources and references#
Use these direct research and official references to verify definitions, scope and limitations.
- Daily Treasury Par Yield Curve Rates — U.S. Department of the Treasury
- The Yield Curve as a Leading Indicator — Federal Reserve Bank of New York
- 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity — Federal Reserve Bank of St. Louis
Key principles#
Name the maturities
State the exact short and long maturities, data series, frequency and observation date.
Check the lag
Historical relationships use different samples, thresholds and lead times and can change as new data arrive.
No market timing
MarketPulse does not convert curve inversion into a timing instruction for bonds, currencies, equities or any portfolio.