10Y-3M Spread vs 10Y-2Y Spread
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
The 10Y-3M (NY Fed) and 10Y-2Y (market favorite) spreads can signal different things. 10Y-2Y inverts earlier because 2Y reflects the market's rate-cut pricing. 10Y-3M inverts later because 3M bills track the current Fed Funds rate. Both inverted and then steepening is the classic late-cycle pattern.
Cross-Asset Analysis
10Y-3M Yield Spread captures spread between 10-year Treasury and 3-month T-bill, Fed's preferred recession indicator, whereas 10Y-2Y Yield Spread reflects spread between 10-year and 2-year Treasury yields, classic recession signal when inverted, and the difference between how they move is what the yield curve pair relationship is really about. Hiking cycles historically bring 10Y-3M Yield Spread and 10Y-2Y Yield Spread closer together, with several of the past four decades' cycles inverting this spread well before the next recession became visible. The 10Y-3M Yield Spread-10Y-2Y Yield Spread pair isolates a slice of the Treasury curve, and the spread between them reflects market-implied expectations that single-point yields cannot express.
In a growth-led expansion, the 10Y-3M Yield Spread-10Y-2Y Yield Spread spread typically widen; in disinflation and late-cycle tightening it often flattens and can invert. Duration traders express views on the 10Y-3M Yield Spread-10Y-2Y Yield Spread basis through curve flatteners and steepeners, sized against the historical volatility of the spread. The shape anchored by 10Y-3M Yield Spread and 10Y-2Y Yield Spread feeds into business-cycle frameworks that portfolio managers use to calibrate overall beta exposure.
Rate repricing flows through 10Y-3M Yield Spread and 10Y-2Y Yield Spread at different speeds, with the shorter-dated leg reacting first to FOMC communication and the longer-dated leg integrating slower-moving macro fundamentals. Sector allocators rely on the 10Y-3M Yield Spread-10Y-2Y Yield Spread spread to tilt between banks, which benefit from steepeners, and rate-sensitive growth names, which benefit from flatteners.
90-Day Statistics
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Frequently Asked Questions
What is the relationship between 10Y-3M Yield Spread and 10Y-2Y Yield Spread?+
10Y-3M Yield Spread and 10Y-2Y Yield Spread are connected through the Treasury yield curve and monetary policy expectations. When the policy rate path shifts, both respond, though with different sensitivities and at different speeds. The spread between 10Y-3M Yield Spread and 10Y-2Y Yield Spread captures the specific macro signal that flows through this relationship.
When does 10Y-3M Yield Spread typically lead 10Y-2Y Yield Spread?+
10Y-3M Yield Spread tends to lead 10Y-2Y Yield Spread during policy regime shifts, where the short end moves before the long end reprices. In those periods, moves in 10Y-3M Yield Spread precede corresponding moves in 10Y-2Y Yield Spread by days to weeks, depending on the transmission channel and the depth of each market.
How are 10Y-3M Yield Spread and 10Y-2Y Yield Spread historically correlated?+
Long-run correlation between 10Y-3M Yield Spread and 10Y-2Y Yield Spread varies by regime. Yields at different maturities are typically positively correlated in direction but differ in magnitude, which is what makes the spread informative. The correlation is not stable: it shifts with macro conditions, and the periods when it breaks down are often the most informative moments in the 10Y-3M Yield Spread-10Y-2Y Yield Spread relationship.
What macro conditions drive divergence between 10Y-3M Yield Spread and 10Y-2Y Yield Spread?+
Divergence between 10Y-3M Yield Spread and 10Y-2Y Yield Spread typically arises from quantitative easing, quantitative tightening, foreign reserve flows, or term premium dislocations. When one asset's idiosyncratic drivers dominate, the spread moves in ways that the common macro story does not predict, which is usually a signal to look more carefully at the specific drivers at work in 10Y-3M Yield Spread or 10Y-2Y Yield Spread.
Is 10Y-3M Yield Spread a hedge for 10Y-2Y Yield Spread?+
Within the Treasury curve, 10Y-3M Yield Spread is not typically a hedge for 10Y-2Y Yield Spread; they are both duration exposures with different convexity and roll characteristics. Effective hedging requires matching the hedge to the specific risk being protected, and the 10Y-3M Yield Spread-10Y-2Y Yield Spread pair is best stress-tested under scenarios the investor most worries about before being sized into a real portfolio.
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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.