2s10s Spread

The 2s10s spread is the yield difference between the 10-year and 2-year U.S. Treasury notes, expressed in basis points. It is the most widely cited measure of the yield curve slope and serves as a barometer for economic expectations and monetary policy positioning.

A positive 2s10s spread (the historical norm) indicates an upward-sloping curve. A negative spread means the curve is inverted. The spread fluctuates based on:

  • Fed policy expectations: Anticipated rate hikes flatten the curve (raising 2Y more than 10Y); anticipated cuts steepen it
  • Economic outlook: Growth optimism steepens the curve; recession fears flatten or invert it
  • Term premium shifts: Changes in the compensation for holding longer-duration risk
  • Supply dynamics: Treasury issuance patterns and dealer positioning

The 2s10s spread typically ranges from 0 to +250 bps during normal environments. It has inverted before every U.S. recession since the late 1970s. The 2022-2024 cycle saw a sustained inversion, with the spread reaching approximately -108 bps in July 2023.

Market participants reference the 2s10s spread in regime classification: a steepening spread during a rally is a bull steepener, while a flattening spread during a selloff is a bear flattener. The five regime classifications (bull/bear x steep/flat, plus Consolidation) each carry distinct implications for portfolio positioning.

View chart →

Related Terms

  • Yield Curve Inversion — When short-term Treasury yields exceed long-term yields, often signaling recession risk.
  • Yield Curve — A line plotting Treasury yields across maturities from short-term bills to long-term bonds.
  • Bull Steepener — A yield curve regime where rates fall and the curve steepens, typically signaling expectations of monetary easing.
  • Bear Flattener — A yield curve regime where rates rise and the curve flattens, often signaling monetary tightening.