What happened last time? › Yield curve
What happens when the yield curve inverts (10-year below 2-year)?
It has happened 15 times since 1976. A year after it began, the S&P 500 was up 10 of 15 times, with a median move of +12.4%. On an ordinary day in the same years the median was +11.6%, up 78% of the time.
10y minus 2y Treasury below 0. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | +1.2% 73% up · n 15 · normal +1.2% | +12.4% 67% up · n 15 · normal +11.6% | +23.4% 67% up · n 15 · normal +34.0% |
| Gold | -0.6% 40% up · n 15 · normal +0.2% | +5.9% 67% up · n 15 · normal +5.3% | +29.3% 60% up · n 15 · normal +12.5% |
| Oil | +2.3% 53% up · n 15 · normal +0.2% | +3.3% 53% up · n 15 · normal +1.6% | +0.2% 53% up · n 15 · normal +9.2% |
| 10-year yield (pts) | +0.07 pts 60% up · n 15 · normal -0.01 pts | +0.12 pts 53% up · n 15 · normal -0.09 pts | -1.16 pts 33% up · n 15 · normal -0.45 pts |
| Inflation, CPI y/y (pts) | +0.05 pts 53% up · n 15 · normal -0.01 pts | -0.83 pts 40% up · n 15 · normal +0.03 pts | -2.08 pts 20% up · n 15 · normal -0.28 pts |
| Unemployment rate (pts) | -0.05 pts 14% up · n 14 · normal 0.00 pts | 0.00 pts 40% up · n 15 · normal -0.30 pts | +1.70 pts 87% up · n 15 · normal -0.80 pts |
Median move after each episode began, how often it rose, and how many episodes had data. "Normal" is the same move from any trading day in the same years.
Every time it happened
- 2022-07-06 · true for 541 trading days · S&P 500 a year later: +14.7%
- 2022-04-01 · true for 2 trading days · S&P 500 a year later: -9.6%
- 2019-08-27 · true for 3 trading days · S&P 500 a year later: +21.2%
- 2007-05-03 · true for 18 trading days · S&P 500 a year later: -5.9%
- 2006-06-08 · true for 185 trading days · S&P 500 a year later: +19.9%
- 2006-01-31 · true for 32 trading days · S&P 500 a year later: +12.4%
- 2005-12-27 · true for 3 trading days · S&P 500 a year later: +13.6%
- 2000-02-02 · true for 228 trading days · S&P 500 a year later: -2.5%
- 1998-05-26 · true for 27 trading days · S&P 500 a year later: +19.3%
- 1990-03-08 · true for 16 trading days · S&P 500 a year later: +10.2%
- 1989-08-11 · true for 43 trading days · S&P 500 a year later: -2.7%
- 1988-12-13 · true for 133 trading days · S&P 500 a year later: +27.7%
- 1981-12-28 · true for 120 trading days · S&P 500 a year later: +15.1%
- 1980-09-12 · true for 285 trading days · S&P 500 a year later: -3.1%
- 1978-08-18 · true for 431 trading days · S&P 500 a year later: +3.4%
- 15 separate episodes: a new one starts after 30 days without a match, so one long selloff counts once.
- Try enough situations and one will look like an edge by chance.
- Macro numbers are as published at the time. Stocks include companies that later died.
- How these numbers are made.