# Yield curve: 10-year minus 3-month Treasury rates

> What an inverted yield curve is, why it has preceded most US recessions since 1970, and how Anacleto turns it into a signal.

Updated 2026-10-17 · https://anacleto-zb7h.onrender.com/guides/yield-curve

The **yield curve** thermometer is the difference between the **10-year** and the **3-month** US Treasury rates, in
percentage points. Normally long rates are higher than short ones. When short rates rise above long ones the curve is
**inverted**: markets expect rates, and often growth, to fall.

## How Anacleto reads it

- below **0 points** (inverted): red;
- above **1.5 points** (steep): green;
- in between: neutral.

## What history says

An inverted 10-year/3-month curve has preceded almost every US recession since 1970, usually by one to two years.
The timing is loose: equities have often kept rising for months after the inversion.

## Limits

A recession is not the same as a bear market, and the curve says nothing about how deep a fall would be. It is one of
five thermometers, never a signal on its own. See [credit spread](https://anacleto-zb7h.onrender.com/guides/credit-spread) for the other stress measure.