Yield Curve

Sweep of bond yields across maturities whose inversion has preceded most U.S. recessions.

Specifications & Metrics

type

Leading

frequency

Continuous

publisher

Bond markets; tracked by central banks and data vendors

Core Principles & Analysis

• Long yields normally exceed short yields because holders demand compensation for time and inflation risk.
• The ten-year minus three-month spread inverted before each U.S. recession since the late 1960s, though not every inversion was followed by one.
• Its shape aggregates market expectations of policy rates, growth, and inflation in a single picture.

Sources

• Federal Reserve Bank of New York: The Yield Curve as a Leading Indicator