What happened last time? › Yield curve
What happens when the yield curve is deeply inverted (10-year half a point below 2-year)?
It has happened 10 times since 1976. A year after it began, the S&P 500 was up 7 of 10 times, with a median move of +14.5%. On an ordinary day in the same years the median was +11.6%, up 78% of the time.
10y minus 2y Treasury below -0.5. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | +1.2% 60% up · n 10 · normal +1.2% | +14.5% 70% up · n 10 · normal +11.6% | +30.9% 89% up · n 9 · normal +34.0% |
| Gold | +0.9% 50% up · n 10 · normal +0.2% | +23.2% 70% up · n 10 · normal +5.3% | +14.9% 67% up · n 9 · normal +12.5% |
| Oil | +1.1% 60% up · n 10 · normal +0.2% | +3.5% 60% up · n 10 · normal +1.6% | -13.2% 22% up · n 9 · normal +9.2% |
| 10-year yield (pts) | +0.06 pts 50% up · n 10 · normal -0.01 pts | +0.31 pts 70% up · n 10 · normal -0.09 pts | -0.08 pts 44% up · n 9 · normal -0.45 pts |
| Inflation, CPI y/y (pts) | -0.06 pts 44% up · n 9 · normal -0.01 pts | -2.72 pts 30% up · n 10 · normal +0.03 pts | -4.97 pts 11% up · n 9 · normal -0.28 pts |
| Unemployment rate (pts) | +0.05 pts 50% up · n 10 · normal 0.00 pts | +0.40 pts 80% up · n 10 · normal -0.30 pts | +0.80 pts 78% up · n 9 · 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
- 2023-12-12 · true for 2 trading days · S&P 500 a year later: +31.0%
- 2022-11-02 · true for 199 trading days · S&P 500 a year later: +14.8%
- 2022-09-21 · true for 2 trading days · S&P 500 a year later: +14.3%
- 2000-04-07 · true for 2 trading days · S&P 500 a year later: -25.6%
- 1982-04-16 · true for 2 trading days · S&P 500 a year later: +35.9%
- 1982-02-16 · true for 4 trading days · S&P 500 a year later: +29.3%
- 1981-04-20 · true for 123 trading days · S&P 500 a year later: -14.8%
- 1980-10-24 · true for 90 trading days · S&P 500 a year later: -8.7%
- 1979-08-22 · true for 167 trading days · S&P 500 a year later: +15.1%
- 1978-10-31 · true for 138 trading days · S&P 500 a year later: +9.3%
- 10 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.