Yield Spread (10Y-3M) - Historical Chart
10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity. Gray shaded areas indicate U.S. recessions.
Source: Federal Reserve Bank of St. Louis (FRED), Series T10Y3M. Shaded areas = NBER recession dates. Updated 2026-03-10.
What the Mar 2026 Data Shows
At 0.46%, the yield spread (10y-3m) in Mar 2026 is above the 10-year average of 0.43% by 0.03pp. The trend is upward, with increases in 5 of the last 6 months.
The 10-year minus 3-month Treasury yield spread (FRED series T10Y3M) is the classic recession indicator. In a normal economy, longer-term bonds pay higher yields than short-term bills because investors demand compensation for tying up money longer. When the spread inverts (3-month rates exceed 10-year rates), it signals that bond markets expect economic weakness and future rate cuts.
The 10Y-3M spread has an unbroken track record of predicting recessions since 1970. The key is the sequence: the spread inverts, stays inverted for a sustained period, then normalizes (un-inverts) as the recession begins and the Fed cuts rates. The recession typically starts 6-18 months after the initial inversion.
The spread is calculated daily from constant maturity Treasury rates. A positive spread means the yield curve is normally sloped; a negative spread means it is inverted.
What This Metric Measures
This page tracks the difference between the 10-year Treasury constant maturity rate and the 3-month Treasury bill rate, widely used as a recession probability indicator since an inversion (negative spread) has preceded every U.S. recession since 1970. The data comes from the Federal Reserve Bank of St. Louis FRED database, series T10Y3M, updated daily.
Historical Context
The all-time peak was 5.18% in Aug 1982 — roughly 11.3x the current level. The all-time trough was -1.89% in Jun 2023. During COVID-19 in 2020, the reading hit 1.16% (Mar 2020). Year-over-year, the metric has moved 757.1%.
Why It Matters
For business owners, the yield curve spread is the best available forward indicator of whether a recession is coming. If the spread is deeply inverted, start building cash reserves, delaying discretionary investments, and restructuring variable-rate debt before conditions deteriorate. If the spread has recently un-inverted from a sustained inversion, a recession may already be starting -- this is the most dangerous period for overleveraged businesses.
What This Means for Business Owners
Understanding where this metric stands relative to historical norms helps business owners make better borrowing decisions. Metrics far from their 10-year average often signal turning points that affect the cost and availability of credit.
Recession Signal - Frequently Asked Questions
The 10-year minus 3-month Treasury spread is 0.46% as of Mar 2026, per FRED series T10Y3M. A negative value means the yield curve is inverted; a positive value means it is normally sloped.
Since 1970, the 10Y-3M spread has inverted before every U.S. recession with no false positives (though there was a brief inversion in 1998 not followed by an immediate recession). The lead time varies from 6-18 months between inversion and recession onset.
An inversion means bond investors expect the Fed to cut short-term rates in the future. The Fed typically cuts rates during recessions. So an inversion reflects collective market judgment that economic weakness is ahead. It also directly squeezes bank profitability (borrow short, lend long becomes unprofitable).
Banks borrow at short-term rates (deposits) and lend at long-term rates (mortgages, commercial loans). When the curve inverts, this spread turns negative, crushing bank margins. Banks respond by tightening lending standards and reducing loan volume.
The 10Y-3M spread has a slightly better track record because the 3-month bill rate is more tightly connected to Fed policy than the 2-year note, which includes term premium and expectations. The New York Fed uses the 10Y-3M spread in its official recession probability model.
FRED series T10Y3M from the Federal Reserve Board of Governors. Calculated daily as the difference between the 10-Year Treasury Constant Maturity Rate and the 3-Month Treasury Bill Secondary Market Rate. Updated each business day.