Yield Curve Spread Calculator
Calculate Treasury yield curve spreads (2s/10s, 3M/10Y, 5s/30s) and detect inversions. The 2s/10s and 3M/10Y spreads have predicted every U.S. recession since 1955 — see current interpretation, free and instant.
Get current yields from treasury.gov interest rate statistics or FRED.
What Is the Yield Curve and Why Spreads Matter
The U.S. Treasury yield curve plots the interest rates of bonds with different maturities — typically from 1 month to 30 years. Per U.S. Treasury daily yield curve data, the shape of this curve reveals what bond markets expect for future interest rates, inflation, and economic growth. A normal yield curve slopes upward (long-term yields > short-term yields) reflecting term premium and growth expectations. A flat yield curve (short and long yields nearly equal) signals economic uncertainty. An inverted yield curve (short yields above long yields) has preceded every U.S. recession since 1955 — making yield curve spreads one of the most reliable single recession indicators tracked by the Federal Reserve.
2s/10s vs 3M/10Y — Which Spread Is Best?
The 2-year/10-year spread (2s/10s) is the headline metric in financial media — a popular shorthand for curve shape. The 3-month/10-year spread is preferred by Federal Reserve research, including the New York Fed yield curve probability model, because it most directly compares Fed policy rate expectations (3-month) to long-term growth and inflation expectations (10-year). When 3M/10Y inverts (3M yield > 10Y yield), the Fed's recession probability model historically signals 50%+ recession probability within the next 12 months. The 2s/10s typically inverts 6-18 months before recession. The 5s/30s spread reflects long-term inflation expectations and is less reliable as a recession signal.
Reading 2026 Yield Curve Conditions
As of May 2026, U.S. Treasury yields show a partially recovered curve following the 2022-2024 inversion period. Per the Federal Reserve FOMC schedule, the federal funds rate sits at 4.25-4.50% with markets pricing 1-2 additional cuts in 2026. The 2s/10s curve has steepened back to positive territory after multiple cuts in 2025, while 3M/10Y remains modestly positive. Historically, recession typically follows curve re-steepening after inversion, not the inversion itself — the bull steepener pattern (short rates falling faster than long rates as the Fed cuts in response to weakness) is the actual recession trigger. Last updated May 2026.
How Investors Use Yield Spread Signals
Bond investors use yield curve spreads to time duration (long vs short) positioning. Equity investors watch the curve as a recession-leading indicator that often peaks 6-12 months before market peaks — though notably the 2022-2024 inversion did not produce immediate recession, illustrating the curve's variable lead time. Real estate investors track the 10-year Treasury because mortgage rates correlate strongly (~80% R-squared per Freddie Mac PMMS) with the 10-year. Bank stocks suffer during inverted yield curves because banks borrow short and lend long — inversion compresses net interest margin. Use this calculator alongside the dividend yield calculator and a Treasury TIPS spread to triangulate inflation expectations and growth signals.
Frequently Asked Questions
What is the 2s/10s yield curve spread?
The 2s/10s spread is the difference between the 10-year Treasury yield and the 2-year Treasury yield, expressed in basis points (bps). A positive spread (10Y > 2Y) is normal. A negative spread is an inversion — historically a strong recession warning signal that has predicted every U.S. recession since 1955.
How accurate is yield curve inversion as a recession predictor?
Per Federal Reserve research, the 3M/10Y spread inversion has preceded every U.S. recession since 1955 with a typical lead time of 6-18 months. There has been one false positive (1966 mid-cycle slowdown). The 2022-2024 inversion took longer than usual to translate into recession, illustrating that lead times vary.
Why does an inverted yield curve predict recession?
Inversion happens when the Fed raises short-term rates aggressively to fight inflation, while long-term rates stay anchored by lower growth expectations. This compresses bank net interest margins, tightens credit, and signals the bond market expects rate cuts (in response to weakness) ahead. The mechanism is both a signal and a cause.
Which yield curve spread does the Fed prefer?
The New York Fed Recession Probability Model uses the 3-month/10-year spread (3M/10Y) because it most directly compares current Fed policy (3M T-bill yield) to long-term growth expectations (10-year Treasury). The 2s/10s is more popular in financial media but less precise.
Where do I get current Treasury yields?
Free sources: U.S. Treasury Daily Yield Curve at home.treasury.gov, FRED at fred.stlouisfed.org (DGS series for daily yields), CNBC, Bloomberg, Yahoo Finance. Yields update daily after 4 PM ET.
Should I sell stocks when the yield curve inverts?
Historically NO. Stocks typically continue rising for 6-18 months after inversion before peaking. Selling at inversion has missed substantial gains. A more nuanced approach: increase cash position modestly, lengthen bond duration to capture rate-cut returns, and avoid concentrated cyclical sector bets.