What happened last time? › Yield curve
What happens when the yield curve is steep (10-year 2.5 points above 2-year)?
It has happened 8 times since 1976. A year after it began, the S&P 500 was up 8 of 8 times, with a median move of +11.4%. On an ordinary day in the same years the median was +11.6%, up 78% of the time.
10y minus 2y Treasury above 2.5. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | +2.1% 75% up · n 8 · normal +1.2% | +11.4% 100% up · n 8 · normal +11.6% | +34.0% 100% up · n 8 · normal +34.0% |
| Gold | +0.7% 63% up · n 8 · normal +0.2% | +15.7% 75% up · n 8 · normal +5.3% | +11.1% 63% up · n 8 · normal +12.5% |
| Oil | +0.9% 63% up · n 8 · normal +0.2% | -0.3% 50% up · n 8 · normal +1.6% | -6.0% 50% up · n 8 · normal +9.2% |
| 10-year yield (pts) | -0.03 pts 50% up · n 8 · normal -0.01 pts | -0.47 pts 13% up · n 8 · normal -0.09 pts | -0.67 pts 13% up · n 8 · normal -0.45 pts |
| Inflation, CPI y/y (pts) | -0.02 pts 25% up · n 8 · normal -0.01 pts | +0.45 pts 75% up · n 8 · normal +0.03 pts | -0.02 pts 50% up · n 8 · normal -0.28 pts |
| Unemployment rate (pts) | -0.10 pts 29% up · n 7 · normal 0.00 pts | -0.85 pts 25% up · n 8 · normal -0.30 pts | -2.10 pts 13% up · n 8 · 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
- 2013-11-20 · true for 28 trading days · S&P 500 a year later: +15.2%
- 2013-08-19 · true for 1 trading day · S&P 500 a year later: +20.4%
- 2010-12-03 · true for 164 trading days · S&P 500 a year later: +1.6%
- 2009-05-22 · true for 192 trading days · S&P 500 a year later: +22.6%
- 2008-11-03 · true for 5 trading days · S&P 500 a year later: +8.2%
- 2003-07-17 · true for 58 trading days · S&P 500 a year later: +12.2%
- 1992-09-04 · true for 28 trading days · S&P 500 a year later: +10.6%
- 1992-07-08 · true for 12 trading days · S&P 500 a year later: +9.3%
- 8 separate episodes: a new one starts after 30 days without a match, so one long selloff counts once.
- Few episodes: read the ranges and the interval, not just the median.
- 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.