10Y–2Y Treasury Spread
The gap between the 10-year and 2-year Treasury yield is the market's oldest recession gauge. When it turns negative the curve is inverted — short money costs more than long money.
History
What the 10Y–2Y spread measures
['The spread is the yield on the 10-year Treasury note minus the yield on the 2-year note, both constant-maturity rates published by the U.S. Treasury and distributed through FRED. A positive number means lenders demand more to lend for a decade than for two years — the normal shape, because time and inflation risk should be paid for.
', 'A negative number means the opposite. Investors accept less for ten years than for two, usually because they expect growth and inflation to fall and want duration before a cutting cycle starts. That is why the spread is read as a forward-looking growth signal rather than as a price target.
']How to read the reading on this page
["Three numbers matter. The level tells you whether the curve is inverted. The percentile tells you how unusual today's level is against the whole record since 1976. The direction of change tells you whether the curve is steepening or flattening, which is often more informative than the level itself: a steepening curve out of deeply negative territory usually means the market is pricing cuts because the economy is already slowing.
", 'One reading is noise. What people actually watch is persistence — how many consecutive sessions the spread has stayed below zero — together with how far it went.
']Why inversions matter, and why they mislead
['Every U.S. recession since the 1970s was preceded by an inverted 10Y–2Y curve. The catch is the lag: the gap between the first inversion and the start of a recession has run from roughly six months to two years — long enough to be useless as a timing tool and useful only as a regime warning.
', 'It also fails in the other direction. An inversion is a probability statement, not a schedule. There have been inversions followed by a slowdown rather than a recession, and long stretches where the curve inverted, un-inverted, and the expansion continued. Treat it as one input in a set.
']How we calculate it
["We pull series DGS10 and DGS2 from FRED, join them on observation date, and subtract the 2-year from the 10-year. Observations where either series is missing are dropped rather than filled, so holidays leave gaps instead of fake zeroes. The percentile is the share of daily observations since June 1976 that sit below today's value.
", 'The file is rebuilt once a day after the U.S. close. Nothing here is intraday and nothing is adjusted for inflation.
']Distribution since 1976
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
Is an inverted yield curve a recession signal?
It has preceded every U.S. recession since the 1970s, with lags of roughly six months to two years and with false positives along the way. Treat it as a warning about growth risk, not a timing signal.
Why use the 2-year instead of the 3-month bill?
The 10Y–3M spread is the version Federal Reserve research staff tend to prefer because the short end tracks the policy rate more closely. The 10Y–2Y is what markets quote most and it moves earlier.
How often is the data updated?
Once a day, after the Treasury publishes its constant-maturity rates. The page always shows the observation date so you can tell how fresh the number is.
Why is the latest stretch of the chart locked?
The current reading and the full historical record are free. The most recent sessions — the part that tells you what the curve is doing right now — are part of the member plan.