As of March 02, 2026, the Treasury yield curve remains modestly upward sloping with a 10-year minus 2-year spread of 55 basis points. That spread classifies the curve as "normal" rather than flat or inverted, but it sits in the lower half of its historical distribution. The key takeaway: the market is pricing growth that is positive but not exuberant — a late-cycle environment where policy remains relatively restrictive and headline risks (energy/geopolitics, supply) can move yields quickly.
| Tenor | Yield | 1W Chg | 1M Chg |
|---|---|---|---|
| 1M | 3.74% | +0.02% | +0.02% |
| 3M | 3.72% | +0.03% | +0.05% |
| 6M | 3.68% | +0.06% | +0.06% |
| 1Y | 3.54% | +0.04% | +0.04% |
| 2Y | 3.47% | +0.04% | -0.06% |
| 3Y | 3.49% | +0.04% | -0.14% |
| 5Y | 3.62% | +0.03% | -0.18% |
| 7Y | 3.82% | +0.03% | -0.19% |
| 10Y | 4.05% | +0.02% | -0.19% |
| 20Y | 4.64% | +0.01% | -0.16% |
| 30Y | 4.70% | +0.00% | -0.15% |
The very short end sits around the high 3.7% area (1M 3.74%, 3M 3.72%, 6M 3.68%) before the curve steps down into the mid-3% range at the 1–3 year points (1Y 3.54%, 2Y 3.47%, 3Y 3.49%). From there the curve climbs gradually through the 5–10 year sector to 10Y 4.05% and into the long end at 30Y 4.70%. Over the past month the shortest bills ticked slightly higher while the 2–10 and longer sectors fell (10Y down ~19 bps month-over-month), leaving the curve modestly less steep than a month ago. The kink between the ultra-short (1M–6M) and the 2–3 year area points to a market still focused on near-term policy and cash dynamics while longer rates reflect growth/inflation trade-offs.
The 10Y–2Y spread is +55 bps (1-month change −19 bps) and sits at the 41st historical percentile — positive but not historically steep. The Fed-preferred 10Y–3M spread is +35 bps and sits lower in its distribution (20th percentile), signaling that policy remains relatively restrictive versus longer-term growth expectations. These spreads indicate lower near-term recession probability than during inversion episodes, but they are far from the steep, confidence-building curves seen in strong expansions. Watch the 10Y–3M: its lower percentile is a reminder that front-end policy and bill dynamics (including Fed and Treasury bill flows) still exert outsized influence on curve shape.
On the 10Y–2Y series there have been 44 recorded inversions; recent notable episodes include the long 2022–07–06 to 2024–08–27 inversion (783 days, min −108 bps) and brief 2019 and early‑2022 episodes. Today’s +55 bps is a clear departure from those inversion troughs — the market has uninverted materially since the deep 2022 stretch. Historically, sustained inversions have preceded recessions with a wide lead time (commonly 6–18 months, median ~12 months), so the current normal curve reduces immediate recession odds but does not eliminate late‑cycle risk if the curve re-flattens or inverts again.
| Horizon | Spread Δ | S&P 500 |
|---|---|---|
| 3 Months | -0.02% | +2.6% |
| 6 Months | +0.16% | +7.7% |
| 12 Months | +0.30% | +23.0% |
Data shows eight prior dates with 10Y–2Y within ±25 bps of today (examples: 2025‑09‑03 at 61 bps, 2025‑05‑06 at 52 bps, 2025‑01‑06 at 34 bps). Across those parallels the S&P 500 median 6‑month forward return was +7.7% (positive in 72% of cases) and the 10Y–2Y spread tended to modestly steepen (median +16 bps over six months). That history argues that a shallow positive curve often coincides with continued equity gains, but the outcomes are wide (range −12.9% to +26.4%), so stock upside is not guaranteed and remains conditional on macro shocks and policy clarity.
| 5Y | 1.16% | -0.12% |
| 7Y | 1.47% | -0.12% |
| 10Y | 1.76% | -0.13% |
| 20Y | 2.23% | -0.13% |
| 30Y | 2.47% | -0.11% |
| 5Y | 2.46% | -0.07% |
| 10Y | 2.29% | -0.07% |
TIPS show positive real yields across maturities (5Y 1.16%, 10Y 1.76%, 30Y 2.47%), indicating that real returns remain attractive and implying the market expects modest real growth ahead. Breakeven inflation is slightly above the Fed’s 2% target at the 5‑year (2.46%) and near 2.3% at 10‑year (2.29%), which suggests inflation expectations are anchored but a touch higher in the near-to-intermediate horizon. The combination of positive real yields and modest breakevens points to a market that prizes carry and real return rather than expecting runaway inflation or deflation.
| Sector | 1W | 1M | vs SPX | YTD |
|---|---|---|---|---|
| Energy (XLE) | +2.6% | +10.7% | +12.5% | +26.4% |
| Utilities (XLU) | -0.3% | +8.8% | +10.6% | +10.3% |
| Industrials (XLI) | -0.9% | +6.0% | +7.8% | +13.1% |
| Real Estate (XLRE) | -0.1% | +5.5% | +7.2% | +8.3% |
| Materials (XLB) | -2.7% | +5.4% | +7.2% | +14.5% |
| Cons Staples (XLP) | -2.2% | +5.1% | +6.8% | +13.0% |
| Health Care (XLV) | -0.7% | +1.3% | +3.1% | +1.3% |
| S&P 500 (SPY) | -1.0% | -1.7% | +0.1% | -0.2% |
| Communication (XLC) | +1.5% | -1.8% | -0.0% | +0.2% |
| Financials (XLF) | +0.5% | -4.2% | -2.4% | -6.5% |
| Technology (XLK) | -2.0% | -4.4% | -2.7% | -4.5% |
| Cons Disc (XLY) | -2.0% | -5.6% | -3.9% | -4.2% |
| Stock | Price | 1M | 6M | 1Y | YTD | VS S&P 500 |
|---|---|---|---|---|---|---|
| O Realty Income | $66.56 | +8.8% | +14.8% | +21.7% | +18.1% | +10.6% |
| SO Southern Company | $96.79 | +8.4% | +4.9% | +9.6% | +11.0% | +10.1% |
| DUK Duke Energy | $131.43 | +8.3% | +7.3% | +13.9% | +12.1% | +10.1% |
| PLD Prologis | $141.00 | +8.0% | +25.0% | +16.9% | +10.4% | +9.8% |
| AMT American Tower | $190.25 | +6.1% | -5.8% | -5.2% | +8.4% | +7.9% |
| NEE NextEra Energy | $92.59 | +5.3% | +28.5% | +34.1% | +15.3% | +7.1% |
| TLT 20+ Year Treasury | $89.43 | +2.6% | +5.2% | +0.7% | +2.6% | +4.4% |
| DHI D.R. Horton | $152.61 | +2.5% | -10.0% | +21.0% | +6.0% | +4.3% |
| LEN Lennar | $108.41 | -0.9% | -18.2% | -8.2% | +5.5% | +0.9% |
| JPM JPMorgan Chase | $300.26 | -1.8% | +0.1% | +15.3% | -6.4% | -0.1% |
| KRE Regional Banks ETF | $67.30 | -2.2% | +4.0% | +11.3% | +3.8% | -0.4% |
| ARKK ARK Innovation | $72.26 | -3.5% | -3.6% | +29.9% | -6.1% | -1.7% |
| C Citigroup | $110.76 | -3.8% | +15.4% | +41.4% | -5.1% | -2.0% |
| BAC Bank of America | $49.97 | -6.1% | -1.0% | +10.3% | -9.1% | -4.3% |
| MET MetLife | $72.67 | -7.2% | -10.0% | -13.8% | -7.9% | -5.5% |
| WFC Wells Fargo | $82.53 | -8.8% | +1.0% | +7.1% | -11.4% | -7.0% |
| PRU Prudential | $98.75 | -11.1% | -9.9% | -12.0% | -12.5% | -9.4% |
Sector rotation over the past month favors income/commodity and defensive cyclicals — Energy (+10.7%) and Utilities (+8.8%) are leaders while rate-sensitive Growth sectors have lagged (Technology −4.4%, Consumer Discretionary −5.6%). Financials (−4.2%) have underperformed, consistent with a flatter/less steep curve weighing on net interest margin expectations. Factor-wise, Growth has underperformed Value in the last month as higher-for-longer real yields increase discount-rate pressure on long-duration earnings. Historical parallels (median +7.7% S&P in six months) are supportive for equities overall, but elevated VIX (21.8, spiking +29% week-over-week) signals that volatility and event risk remain meaningful — especially given commodity/geopolitical shocks and issuance dynamics.
Fixed income: adopt a neutral-to-short core duration stance but add selective intermediateterm exposure (5–10 year) for carry if conviction is that rates are range-bound with positive real yields; avoid long-duration bullets unless conviction grows that the Fed will cut sooner than priced. Equities: favor Energy and defensive cyclicals/utility exposure for income and commodity upside; underweight long-duration growth names and be cautious on Financials until the curve re-steepens sustainably. Cross-asset signals to watch: (1) a renewed fall in 10Y–2Y toward zero or negative would raise recession odds and call for safer equity positioning; (2) a sustained rise in 10Y above ~4.5% or a meaningful break higher in 5‑year breakevens would increase inflation and rate-risk premiums; (3) follow Treasury issuance and Fed bill purchases — TBAC and Treasury statements show Treasury is well-funded through FY2026 but flagged evolving FY2027-28 needs, and Fed bill purchases are supportive of the bill market (monitor auction coverage and indirect bidder demand closely). ([home.treasury.gov](https://home.treasury.gov/news/press-releases/sb0386?utm_source=openai))