Macro glossary
Yield Curve Inversion
When short-term Treasury yields exceed long-term Treasury yields, signaling elevated recession risk.
Definition
The 2s10s spread (10-year Treasury yield minus 2-year) inverts when markets expect the Fed to cut aggressively in the medium term. An inverted 2s10s has preceded every US recession since 1955 with only one false signal (1966). Historically, recessions follow 6-18 months after the curve un-inverts, not when it first inverts.
Related indicators
Yield Curve 2s10s
Monitor the 2-year/10-year Treasury yield curve spread in real time. Yield curve inversions have pre
Yield Curve 2s30s
Track the 2-year/30-year Treasury yield curve spread. A wider view of the term structure that signal
NY Fed Recession Prob
Track the New York Fed's recession probability model based on the 3-month/10-year Treasury spread. E
Related terms
Term Premium
The extra yield investors demand to hold longer-duration bonds instead of rolling short-duration bonds.
Recession
A significant, broad-based, sustained decline in economic activity lasting more than a few months.
Federal Funds Rate
The overnight interbank lending rate targeted by the Federal Open Market Committee.