Treasury Yield Curve
Primary source: U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates. Historical data available via FRED (series DGS1MO through DGS30).
What Is the Yield Curve?
The Treasury yield curve plots the yields of U.S. government debt securities across maturities, from short-term bills (1 month) to long-term bonds (30 years). Because Treasuries are considered risk-free (backed by the full faith and credit of the U.S. government), the yield curve serves as the baseline from which all other interest rates in the economy are priced.
The shape of the yield curve reflects market expectations about future interest rates, economic growth, and inflation. It is one of the most closely watched indicators in financial markets.
Yield Curve Shapes
Normal (Upward-Sloping)
Longer maturities yield more than shorter ones. This is the typical shape, reflecting the term premium -- investors demand higher compensation for locking up money for longer periods. Signals expectations of steady economic growth.
Inverted (Downward-Sloping)
Short-term yields exceed long-term yields. Historically associated with impending recession. Occurs when markets expect the Fed to cut rates in the future due to economic slowdown. The 2s10s spread (10-year minus 2-year yield) turning negative is the most commonly cited inversion signal.
Flat
Yields are similar across maturities. Typically a transitional state that occurs as the curve moves from normal to inverted or vice versa. Signals uncertainty about the economic outlook.
The 2s10s Spread
The "2s10s spread" is the difference between the 10-year and 2-year Treasury yields (FRED series T10Y2Y). It is the most widely followed measure of yield curve slope. When this spread turns negative (inverts), it has preceded every U.S. recession since 1955, with only one false signal (a brief inversion in 1966 that was followed by a significant economic slowdown but not an official NBER recession).
The lead time between inversion and recession has varied considerably -- from a few months to nearly two years. The inversion that began in April 2022 and lasted through early 2024 was the longest sustained inversion in modern history, yet no recession was declared through 2025, leading to debate about whether the signal's reliability has diminished in the post-pandemic era.
Historical Inversions and Recessions
| Inversion Period | Duration | Subsequent Recession | Lead Time |
|---|---|---|---|
| August 2019 | Brief (days) | February 2020 (COVID-19) | ~6 months |
| April 2022 -- March 2024 | ~23 months | None declared through 2025 | N/A |
| June 2006 -- March 2007 | ~9 months | December 2007 | ~9 months |
| February 2000 -- December 2000 | ~10 months | March 2001 | ~3 months |
| January 1989 -- October 1989 | ~9 months | July 1990 | ~9 months |
Recession dates per NBER Business Cycle Dating Committee. Inversion defined as 10-year minus 2-year Treasury yield turning negative.
Treasury Maturities Reference
| Tenor | FRED Series | Description |
|---|---|---|
| 1-Month | DGS1MO | Treasury bill; auctioned weekly |
| 3-Month | DGS3MO | Treasury bill; benchmark short-term rate, used in T-bill futures |
| 6-Month | DGS6MO | Treasury bill; auctioned weekly |
| 1-Year | DGS1 | Treasury bill/note; transition point between bills and notes |
| 2-Year | DGS2 | Treasury note; most sensitive to near-term Fed policy expectations |
| 3-Year | DGS3 | Treasury note; auctioned monthly |
| 5-Year | DGS5 | Treasury note; important benchmark for auto loans and corporate debt |
| 7-Year | DGS7 | Treasury note; auctioned monthly |
| 10-Year | DGS10 | Treasury note; primary benchmark for mortgage rates and long-term borrowing |
| 20-Year | DGS20 | Treasury bond; reintroduced in May 2020 after a 34-year hiatus |
| 30-Year | DGS30 | Treasury bond; longest maturity; benchmark for long-duration liabilities |
Source: U.S. Treasury, Daily Treasury Par Yield Curve Rates. Updated each business day.