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What is a 10-2 yield spread?

The 10-2 Treasury Yield Spread is the difference between the 10 year treasury rate and the 2 year treasury rate. A 10-2 treasury spread that approaches 0 signifies a "flattening" yield curve. A negative 10-2 yield spread has historically been viewed as a precursor to a recessionary period.

What is a Treasury yield curve?

The U.S. Treasury yield curve refers to a line chart that depicts the yields of short-term Treasury bills compared to the yields of long-term Treasury notes and bonds. The chart shows the relationship between the interest rates and the maturities of U.S. Treasury fixed-income securities.

What does a positive 10-year minus 2 year Treasury yield mean?

The 10-year minus 2-year Treasury (constant maturity) yields: Positive values may imply future growth, negative values may imply economic downturns.

Is a 2-year yield curve normal?

The scenario is considered normal because investors are compensated for holding longer-term securities, which possess greater investment risks. The spread between 2-year U.S. Treasury securities and 30-year U.S. Treasury securities defines the slope of the yield curve, which in this case is 256 basis points.

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