The Treasury borrows money for terms ranging from one month to thirty years, and it pays a different rate for each one. Plotted together, those rates form the yield curve: a line running from the shortest maturities to the longest, showing what lenders demand for tying their money up longer.

What shape the curve normally takes

Lending for thirty years carries more uncertainty than lending for one month, so a lender usually wants to be paid more for it. Under ordinary conditions the curve slopes upward: short-term yields sit lower, long-term yields sit higher, and the gap between them reflects that extra uncertainty.

What it means when that flips

Sometimes short-term yields rise above long-term ones, so the curve runs the wrong way. That is what an inversion is: the market is being paid more to lend for a few months than to lend for ten years, which usually signals that lenders expect rates to fall later, often because they expect the economy to weaken.

Two comparisons get used most often to describe this: the gap between the 10-year and 2-year yields, and the gap between the 10-year and 3-month yields. Neither gap proves what will happen next. Both are read as one signal among several, alongside the rest of the published record, and worth checking against how the Federal Open Market Committee itself describes conditions in its own statements, covered in Which Interest Rate Do They Actually Set?.

The chart shows the yield the Department of the Treasury is currently offering across the full run of maturities it issues, starting at the 1-month bill and running out to the 30-year bond. Each point on the line is a separate published yield, and the figures behind it are listed with their source underneath the chart so a reader can check any single point against where it came from.

The two spreads

Below the curve, two numbers are worked out from it directly: the 10-year yield minus the 2-year yield, and the 10-year yield minus the 3-month yield. Both are simple subtraction, one published yield taken from another, so neither spread can move unless one of the underlying yields has moved first.

Why two spreads rather than one

The 2-year yield reflects what the market expects further out, while the 3-month yield reflects the rate on offer right now, and commentators have used either as the short end of the comparison depending on what they are trying to show. Showing both spreads side by side means a reader is not left guessing which one a particular headline was built on.

A chart built from a daily data feed can lag the market by the gap between one update and the next, and a yield the Treasury later revises will change the spread calculated from it. Where a figure looks out of step with what has been reported elsewhere, the published series itself is the thing to check against. The method behind the figures is set out on How This Site Handles Figures, and the mechanics of the curve itself, including what a past inversion did, are covered separately on this page.

An inversion is what happens when a shorter Treasury pays more than a longer one, so a lender gets paid less for tying money up for ten years than for tying it up for two. That is backwards from what usually happens, because lenders normally want more compensation for longer, and it has drawn attention each time it has occurred since 1976.

What each episode records

Every recorded episode carries a start date, a length, and the spread that triggered it, most often the gap between the 10-year and 2-year Treasury yields or the gap between the 10-year and 3-month yields. Recording an episode does not require guessing at what it meant at the time. It only requires noting when the shorter yield first cleared the longer one, and when it stopped.

Duration varies

Some inversions have lasted only a few weeks before the curve returned to its usual shape. Others have run for the better part of a year. The length of an episode is measured from the historical record itself, because no two episodes have run the same course.

What followed each one

Part of the record is what happened after the curve normalised. Reading the two side by side, an episode's length and its aftermath, is what the episode list is for. It sets out the arithmetic of what happened.

Reading the record

None of this is a forecast, and no episode here is presented as a rule the next one has to follow. It is a dated account of what the curve has done before, drawn from the same public Treasury yield data described alongside the current curve. Anyone checking a specific episode can trace it back to that same source and confirm the dates for themselves.

The mechanics of how a policy rate decision feeds through to what a curve does are covered separately in What a Rate Decision Does to a Payment, and What It Actually Did, and the vocabulary around yields and spreads is set out in the Central Banking Glossary.

Where the Treasury publishes it

The U.S. Department of the Treasury posts a full set of yield figures for its outstanding notes and bonds on every day the bond market trades, under the heading Daily Treasury Par Yield Curve Rates. Each row on that table lines up a maturity, from one month out to thirty years, against the yield the market is pricing for it that day. The figures shown on this page are drawn from that published table, and each one carries the date it was quoted.

Reading the maturities

The curve runs across a set of maturities: one month, three months, six months, one year, two years, five years, seven years, ten years, twenty years and thirty years. Plotted from short to long, the ordinary shape rises as the maturity lengthens, because lending money for longer usually asks for a higher yield in return. When a shorter maturity pays more than a longer one, that stretch of the curve has turned downward, which is what an inversion looks like once it is drawn out.

What a spread actually is

A spread is one yield subtracted from another. The two spreads used here are the ten-year yield minus the two-year yield, and the ten-year yield minus the three-month yield. A positive result means the longer maturity still pays more, which is the ordinary arrangement. A negative result means it does not, and that is the condition the glossary lists as a yield curve inversion.

Checking a figure against the source

Because the Treasury's own table carries the same maturities and the same dates as this page, any figure here can be checked directly by looking up that date on the Treasury's site and comparing the two rows. That comparison is the way to catch a stale or mistyped figure, and it works the same way for any date among the past inversion episodes covered elsewhere on this page. The method behind how figures are dated and sourced across the site is set out on the How This Site Handles Figures page.