Sahm Rule vs 10Y-2Y Yield Curve
Sahm Rule (3-month MA unemployment 0.5pp above 12-month low) measures labor-market deterioration. 10Y-2Y Treasury spread (FRED T10Y2Y) measures yield curve shape.
Also known as: Sahm Rule Recession Indicator (Sahm rule, recession indicator, Sahm) · 10Y-2Y Yield Spread (yield curve, yield spread, 10-2 spread, 2s10s)
Why This Comparison Matters
Sahm Rule (3-month MA unemployment 0.5pp above 12-month low) measures labor-market deterioration. 10Y-2Y Treasury spread (FRED T10Y2Y) measures yield curve shape. April 2026: Sahm Rule triggered July 2024 (3-month MA U3 reached 4.1% above 3.5% trailing low); 10Y-2Y spread approximately +31bp (10Y 4.31% minus 2Y 4.00%; re-steepened from -110bp peak inversion July 2023). Combined April 2026: Sahm triggered for 21+ months without recession (longest in 54-year history) + yield curve re-steepened from deep inversion. Both major recession signals fired but no recession arrived. Most divergent setup since both indicators became reliable.
The April 2026 Configuration
Sahm Rule status: TRIGGERED since July 2024. 3-month MA U3 reached 4.1% (vs 12-month trailing low ~3.5% from September 2022). Difference 0.6pp above 0.5pp threshold. April 2026 U3 4.3% (3-month MA ~4.3%). Sahm Rule remains triggered.
10Y-2Y spread: ~+31bp (April 2026, 10Y 4.31% minus 2Y 4.00%). Positive (re-steepened). Compares to peak inversion -110bp July 2023 (highest since 1981).
The combined April 2026 reading: Sahm triggered + yield curve normalized. Both classic recession signals fired but recession did not arrive. 21+ months past Sahm trigger without recession (longest in 54-year history; previous longest 9 months).
Sahm Rule has been 100% accurate as recession predictor 1948-2024. April 2026 is potentially first false positive in modern history. Yield curve already produced false positive (deepest inversion since 1981 without recession). Both indicators may need recalibration for post-COVID economy.
Long-Term Range and Recent Trajectory
Sahm Rule history: triggered before every recession 1948-2024 (12 recessions). Average lead time 0-3 months. Maximum lead time 6 months (1953 recession).
2024 trigger: July 2024 (3-month MA reached 0.5pp above prior low). U3 trajectory: 3.5% September 2022 low to 4.3% April 2026 (+80bp over 3.5 years). Slow grinding rise without spike.
10Y-2Y trajectory: 2022-2023 inversion peaked -110bp July 2023. Inversion duration 24 months (July 2022 - mid-2024). Longest sustained inversion in modern history. 2024-2026 re-steepening: from -110bp to +31bp (140bp re-steepening).
Historical inversion-to-recession lag: average 12-18 months. -110bp inversion historically signals near-certain recession. Currently 32 months past peak inversion, no recession.
Range (Sahm Rule): 0% (no trigger) to 6%+ (recession). Threshold 0.5pp. Currently 0.6pp (just above threshold).
Range (10Y-2Y): -110bp (peak inversion 2023) to +275bp (peak steepness 2003-2004). Currently +31bp. Mid-range.
Historical Precedents: Past Episodes
2008-09 GFC: Sahm fired Q1 2008. Yield curve inverted 2006 -25bp peak (mild inversion). Recession started December 2007 (
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Frequently Asked Questions
What is the April 2026 Sahm Rule vs yield curve configuration?+
Sahm Rule TRIGGERED since July 2024 (3-month MA U3 0.6pp above 3.5% trailing low). 10Y-2Y spread +31bp (re-steepened from -110bp peak inversion July 2023). Both classic recession signals fired but recession did not arrive 21+ months later (longest divergence in 54-year history). Sahm Rule potentially first false positive in modern history. Yield curve already false positive.
Has the yield curve ever inverted without a recession?+
1966 brief inversion did not produce recession (only modern false positive). 2022-2024 inversion peaked -110bp (deepest since 1981) without recession 32+ months later. April 2026: longest sustained inversion in modern history (24 months) followed by re-steepening without recession. Yield curve recession signal weakened in post-COVID economy.
How should investors use Sahm vs yield curve signals?+
Yield curve as early warning (12-18 months lead historically). Sahm as confirmation (0-6 months lag). Combined: prepare on yield curve inversion, full risk-off on Sahm trigger. April 2026 anomaly: both signals fired but no recession. Suggests both need recalibration for post-COVID labor force expansion + AI capex era. Risk-off positioning may be premature.
What does the Sahm-Curve divergence imply?+
Sahm triggered + yield curve normalized (April 2026): unprecedented setup. Either (1) recession arrives delayed (yield curve normalization premature), (2) both indicators false positives (most likely), (3) Sahm un-triggers via U3 stabilization. Resolution typically 12-18 months. Cross-asset markets pricing scenario 2 (false positives, soft landing). Position cautiously but not aggressively recessionary.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.