Fixed Income · Core
Inverted Yield Curve
An inverted curve is short rates above long rates — a market statement about expected cuts, term premium, and sometimes recession risk.
Definition
2s10s or 3m10y below zero is the usual headline. Inversion can be a Fed-tight cycle that the long end does not believe will last. Term premium can invert or un-invert the signal.
Why it matters
It is the most watched recession indicator and a terrible timing tool. The un-inversion into easing is often closer to the recession.
Case
2022–24 US 2s10s inversion lasted while growth held. The signal said ‘cuts coming’; the calendar did not say when.
How to read it
Which pair, real vs nominal, and term premium. Then credit and labor — the curve is one instrument, not an oracle.
No query has been run yet. Which is tragically normal for most knowledge systems, but we are trying to evolve past decorative databases.