Yield Curve Analysis

Track global yield curves and spreads. Yield curve inversions have preceded every US recession since 1970.

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Current Yield Cycle Phase

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Bull Shift
Whole curve lower, slope unchanged
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Bear Shift
Whole curve higher, slope unchanged
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Bull Steepening
Short rates fall faster
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Bear Steepening
Long rates rise faster
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Bear Flattening
Short rates rise faster
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Bull Flattening
Long rates fall faster
Current Phase
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10Y-2Y Spread
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3-Month Change
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Global Yield Summary

Last Data Release: --
Country 3M 6M 1Y 2Y 5Y 10Y 30Y 10Y-2Y 10Y-3M Regime Policy Taylor Neutral
Yields in %. Negative spreads indicate yield curve inversion.
How to read the Policy / Taylor / Neutral columns
Policy Rate
The official short-term rate set by each central bank (Fed Funds for the US, Bank Rate for the UK, ECB MRO for the Eurozone, etc.). Sourced from the country's monthly 3-month money-market rate as a proxy.
Taylor Rate
What the Taylor Rule prescribes the policy rate should be given current inflation and the output gap: i = r* + π + 0.5·(π − πtarget) + 0.5·ŷ. If Taylor is well above Policy, the central bank is behind the curve (needs to hike more); well below means restrictive (room to cut).
Neutral Rate (R*)
The equilibrium real interest rate that neither stimulates nor restrains the economy — the long-run target around which policy oscillates. Estimated per country as the trailing 36-month mean of (10-year nominal yield − CPI YoY), with a default of 0.5% when history is too short.
Stance labels (Taylor − Policy gap): Behind the Curve (gap > +1%) · Slightly Easy (gap +0.25 to +1%) · Neutral (±0.25%) · Slightly Tight (gap −0.25 to −1%) · Restrictive (gap < −1%). For the US the standard Okun-law output-gap term is included; other countries use the simplified Taylor (no output gap) because their monthly unemployment series isn't wired into the pipeline today.

Yield Curve Shape

X-axis: Maturity | Y-axis: Yield (%)

Historical Yield Spreads

Red shading indicates yield curve inversion (spread < 0)

Understanding the Yield Cycle

What is the Yield Curve?

The yield curve plots interest rates of bonds with equal credit quality but differing maturity dates. Normally, longer-term bonds pay higher yields to compensate for inflation and duration risk.

Key Spreads
10Y-2Y: Most watched recession indicator
10Y-3M: Fed's preferred measure
30Y-10Y: Long-end steepness

When short-term yields exceed long-term yields, the curve is said to be "inverted" - historically a reliable recession warning signal.

Why Does Inversion Matter?

An inverted yield curve reflects market expectations that:

  • The Fed will need to cut rates in the future
  • Economic growth will slow
  • Inflation will decline

Historical Track Record:

  • Inversions preceded all 8 recessions since 1969
  • Lead time: typically 6-24 months before recession
  • Only 2 false positives (1966, 1998)
Learn more about when inversions matter →
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Key Insight: The Credit Channel

The yield curve is fundamentally a credit-cycle indicator, not a universal recession detector. Inversions only cause recessions when they impair the banking system's ability to lend profitably, triggering credit contraction.

What to watch: Bank lending standards, credit spreads, and financial conditions indices. If these remain healthy during an inversion, recession risk is lower. Read the full analysis →

The Four Yield Cycle Phases

Bull Steepening
🟢 Young Bull Market

What happens: Short-term rates fall faster than long-term rates, curve steepens.

Typical context: Fed cuts rates aggressively during/after recession.

Equity implications: POSITIVE - Early cycle recovery

  • Equity markets begin recovery from lows
  • Risk-on positioning warranted
  • Financials begin to recover
  • Best time to add equity exposure
Bear Steepening
🟢 Mature Bull Market

What happens: Long-term rates rise faster than short-term rates.

Typical context: Recovery underway, inflation expectations rising, Fed still accommodative.

Equity implications: POSITIVE - Expansion phase

  • Strong equity market performance
  • Value/cyclicals outperform
  • Banks benefit from margin expansion
  • Stay invested in risk assets
Bear Flattening
🟠 Caution Zone

What happens: Short-term rates rise faster than long-term rates, curve flattens.

Typical context: Fed hiking rates to combat inflation, late cycle.

Equity implications: CAUTION - Late cycle

  • Reduce risk exposure gradually
  • Growth stocks under pressure
  • Defensive sectors outperform
  • Risk of inversion if hiking continues
Bull Flattening
🔴 Sell-Off Risk

What happens: Long-term rates fall faster than short-term rates.

Typical context: Flight to safety, recession fears, Fed may be pausing.

Equity implications: NEGATIVE - Recession risk

  • Reduce equity exposure significantly
  • High equity volatility expected
  • Defensive positioning critical
  • Can lead to inversion and bear market

Data Sources

United States

FRED (Federal Reserve Economic Data)
Daily Treasury Constant Maturity Rates

United Kingdom

Bank of England
Official Statistics

Other Countries

Central Bank sources via FRED
Canada, Japan, Australia, Switzerland

Data Sources

Treasury Yields: FRED (daily constant maturity rates) | Yield Curve Data: US Treasury