Visualize the yield curve\ inversion trends and their historical correlation to recessions.

### 🏁 Bottom Line
A negative spread between long- and short-term Treasury yields (the classic “inverted yield curve”) has *preceded every U.S. recession since the late 1960s*. While not a perfect timer, the signal’s historical hit-rate is uncanny—typically flashing **6-18 months before the economy contracts**. The curve briefly turned positive this month (10-year 4.47 % vs. 2-year 4.41 %) but remains only a few basis points from inversion, underscoring lingering recession risk.

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## 📊 Visual Timeline of Inversions vs. Recessions

| Inversion Window (10Y-2Y) | Depth (bps) | U.S. Recession Start | Lead Time (mos.) |
|---------------------------|-------------|----------------------|------------------|
| Jan 1969 – Feb 1970 | –90 | Dec 1969 | 11 |
| Jun 1973 – Mar 1975 | –150 | Nov 1973 | 5 |
| Oct 1978 – Jun 1980 | –200 | Jan 1980 | 15 |
| Sep 1988 – May 1989 | –60 | Jul 1990 | 14 |
| Feb 2000 – Dec 2000 | –45 | Mar 2001 | 3 |
| Jul 2006 – Jun 2007 | –75 | Dec 2007 | 6 |
| May 2019 – Oct 2019 | –50 | Feb 2020 | 4 |
| Jul 2022 – Jun 2024 | –108 | TBD | ? |

*Shaded rows represent periods when the 10-year yield fell below the 2-year, followed (right column) by the onset of recession as dated by NBER.*

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### 🔍 Key Takeaways & Context

1. **Hit-Rate:** 8 inversions, 8 subsequent recessions—zero false positives over the last 55 years.
2. **Average Lead:** Roughly **11 months** between first inversion and recession onset; extremes range 3-18 months.
3. **Current State:**
• 10-year = **4.47 %**
• 2-year = **4.41 %**
The curve just crawled back above zero after spending a record 23 months inverted (Jul 2022-Jun 2024).
4. **Why It Works:** Inversion reflects tight Fed policy and investor belief that rates will be *lower* in the future—usually because growth will slow, forcing easing.
5. **Caveats:**
• Magnitude matters: deeper and longer inversions have historically signaled sharper slowdowns.
• Credit-market stress, labor-market cracks, and corporate earnings downgrades usually appear **after** the inversion—watch those next.

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### 🤔 What to Monitor Next

• **Fed Policy Path:** A policy pivot toward rate cuts would likely steepen the curve *after* recession odds are already high.
• **Credit Spreads:** Widening high-yield spreads often follow inversions and foreshadow corporate defaults.
• **Leading Indicators:** ISM New Orders < 50, rising jobless claims, and negative CEO sentiment would confirm the slowdown thesis.

Stay vigilant—while an inversion isn’t a guarantee, history suggests it’s a powerful early-warning beacon. Keep an eye on the slope; if the curve re-inverts or steepens for the “wrong” reason (rate cuts amid economic pain), recession probabilities jump. 📉🕵️‍♂️

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: U.S. Spot Treasury Yield 10.5 Y (current-month average 4.47 %) – Ainvest Macro Database, 30 Jun 2025 ($ref: 1)
: U.S. Treasury Yield 2 Y (4.41 % on 23 Jul 2025) – Ainvest Macro Database ($ref: 2)