The 10Y-3M spread is the yield curve measure favored by the Federal Reserve's own research. It has a slightly better track record than 10Y-2Y, with zero false positives since 1968.
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ALAN INTELLIGENCE · alanglobalintelligence.com
ALAN IntelligenceData as of 2026-08-30
Every historical instance, overlaid — S&P 500 forward path from the event
Each instance (n=9)Median path25th-75th percentileCurrent: 2025
Median forward returns by horizon
Bars: median S&P 500 forward return. Whiskers: 25th-75th percentile. n = 9 occurrences.
Based on 9 historical occurrences. Last triggered: 2025-02-26.
Past performance is not indicative of future results. This material is for informational and educational purposes only and does not constitute investment advice, an offer to buy or sell any security, or a recommendation. Data from publicly available sources believed to be reliable but not guaranteed. All investments involve risk, including possible loss of principal.
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ALAN GLOBAL INTELLIGENCE · alanglobalintelligence.comSource: FRED T10Y3M · Generated 2026-08-30
Historical occurrencesshowing 9 of 9
Date
1M return
1Y return
5Y return
1982-02-01
-5.8%
+22.7%
+128.9%
1989-03-27
+5.6%
+16.1%
+62.1%
1998-09-10
+0.4%
+37.9%
+5.0%
2000-04-07
-6.9%
-25.0%
-24.6%
2006-01-17
-0.2%
+11.2%
+0.9%
2007-07-20
-5.8%
-17.9%
-10.3%
2019-03-22
+4.8%
-20.1%
+86.3%
2022-10-18
+6.4%
+15.0%
—
2025-02-26
-4.4%
+15.5%
—
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
Zero false positives in 55+ years
Unlike the 10Y-2Y (one false positive in 1998), the 10Y-3M has correctly predicted every recession since 1968 with no false alarms. The Fed uses this variant in its own probability models.
The 3M rate is directly controlled by the Fed
Because the 3-month T-bill tracks the Fed Funds rate closely, inversion of 10Y-3M directly reflects the market's view that the Fed is too tight relative to future growth expectations.
Depth and duration of inversion correlate with severity
A brief, shallow inversion (1998-type if it occurred) suggests a soft landing is possible. A deep, prolonged inversion (2006-07, 2022-24) suggests more significant economic slowing.
For your portfolio
Respect the track record — no false alarms since 1968 — but let depth and duration set your urgency, since shallow, brief inversions have pointed to milder outcomes than deep, prolonged ones. Preparation beats exit here: confirm near-term spending doesn't depend on selling stocks, and hold equity targets steady while the long lag plays out.
For information and research only. Not investment advice. ALAN does not place trades or execute orders. Figures come from the sources shown and can lag the market; verify independently before making decisions. Past performance is not predictive of future results.
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ALAN is not a broker-dealer or investment advisor. All data is informational only and does not constitute investment advice. Past performance does not guarantee future results.