Yield Curve Analysis and Recession Signals

Key Takeaways

• The yield curve plots Treasury yields across maturities; its shape signals economic expectations.
• The 2/10 spread inversion has preceded every U.S. recession since 1960 with a 6-to-24-month lead time.
• An inverted yield curve calls for defensive positioning: cash reserves, fixed-rate financing, stress-testing.
• A steepening yield curve after recession signals recovery and opens acquisition windows.
• The yield curve is one tool among many; combine it with employment data, building permits, and credit conditions for a complete picture.