TenQ · breakdowns

The shape of the curveBreakdown

Lenders normally charge more for longer. What happens when they do not?

-1.00%0.00%1.00%Sep '16Sep '17Sep '18Sep '19Sep '20Sep '21Sep '22Sep '23Sep '24Sep '25Sep '26Flat curve10-year minus 2-year 0.33%

On the latest reading in September 2026 the 10-year Treasury yields 0.33% more than the 2-year. A positive number is the normal state of the world: lenders charge more to be paid back later. A negative one means the market expects short rates to fall.

Source: FRED, Federal Reserve Bank of St. Louis · as at 2026-09

Published by the Federal Reserve Board as the difference between two constant-maturity yields. An inversion has preceded every US recession since 1955, which is the reason it is watched - but it has also inverted without one following, the lead time has run from six months to two years, and the curve typically steepens back above zero before a downturn rather than during it. It is a signal about expectations, not a date.

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