10Y–3M Treasury Spread
The 3-month bill tracks the policy rate almost one-for-one, so the 10Y–3M spread is the cleanest read on whether the market thinks the Fed is too tight.
History
Why the 3-month leg
['The 2-year note contains expectations about policy two years out, so it moves on forecast changes. The 3-month bill is tied to the current policy rate with almost no term premium. Subtracting it from the 10-year isolates one question: is the market pricing a long-run rate below where the Fed has rates today?
', "That is why academic work on inversion — including the New York Fed's recession probability model — tends to use the 10Y–3M version rather than the 10Y–2Y.
"]How it differs from 10Y–2Y
['The two spreads are highly correlated but not identical. The 10Y–3M inverts earlier and more deeply when the Fed is hiking, because the bill reprices immediately while the 2-year already discounts the coming cuts. In 2022–2023 the 10Y–3M went deeply negative while the 10Y–2Y hovered near zero.
', 'Watching both is more informative than picking one: a gap between them tells you how much of the inversion is current policy versus expected policy.
']The record since 1982
['The series starts in 1982, which misses the 1970s inversions but captures every episode since. It went as low as roughly −2.5 percentage points in the early 1980s and as high as +3.5 points in 1992 and 2010, when the Fed held the front end at zero into a recovering economy.
', 'Long stretches above zero are the normal state. Negative prints are rare enough that the percentile reading is the fastest way to see how unusual today is.
']How we calculate it
["We publish T10Y3M directly from FRED, which derives it from the Treasury's daily constant-maturity curve. No transformation. The percentile is the share of daily observations since September 1982 below today's value.
", 'The inversion count in the stat strip covers the trailing twelve months, so a curve that inverted and normalised still shows the history.
']Distribution since 1982
Each row is the share of historical observations at or below that level. A reading in the 90th percentile is higher than nine tenths of the record.
Important
Not investment advice. This page is published for information and education only. It is not a recommendation, solicitation, or offer to buy or sell any security. Market data may be delayed, incomplete, or revised. Indicators describe the past; they do not forecast returns. Past performance does not guarantee future results. Do your own research or consult a licensed financial professional before acting on anything you read here.
Questions
Which spread is the "real" inversion signal?
Both are used. The 10Y–3M is the version most academic and Federal Reserve work uses because the bill tracks policy directly; the 10Y–2Y is what financial media quote.
Why does this series start in 1982?
The 3-month constant-maturity series begins there. Earlier data exists on a different basis and would not be comparable.
Can the curve invert without a recession?
Yes, and it can stay inverted for a long time. The signal is about probability and timing, not certainty.
Why is the latest stretch of the chart locked?
The current reading and the full record are free. The most recent sessions are member-only.