1Y vs 10Y Treasury Yield

As of April 2026, the 1Y Treasury yields approximately 3.85 percent and the 10Y Treasury yields 4.31 percent, putting the 1s10s spread at approximately 46 basis points positive. This is a normal-shaped curve at a mid-cycle reading. The recession signal that came from the 2022-2023 deep inversion (which troughed at minus 110 basis points in March 2023) has been removed. Within the framework, 1s10s above 100bp is very steep and characteristic of recovery regimes; 50 to 100bp is typical mid-cycle; 0 to 50bp signals late-cycle flattening; below zero is the classic recession-imminent inversion. The current 46bp print sits at the lower edge of typical mid-cycle.

The 2022-2023 1s10s inversion was the longest sustained recession signal in modern history, troughing at minus 110 basis points in March 2023 (the most extreme inversion since 1981). Yet as of April 2026, no recession has materialized, with the Sahm Rule triggered for 21-plus months without a downturn (the longest sustained Sahm trigger in 54-year history). Three factors offset the signal: labor force expansion through immigration and re-entry added three to four million workers, so unemployment could rise from denominator effects rather than employment loss; ongoing federal fiscal support offset Fed tightness; and AI capex from hyperscalers running 400 billion dollars-plus annually provided a structural economic boost. The episode may be the most clear-cut false signal in 50-plus years.

The 2024-2026 re-steepening from the March 2023 minus 110 basis point trough to the current plus 46 basis points reflects a swing of approximately 156 basis points. The mechanics are straightforward: Fed cuts compressed the 1Y yield as the Fed cut the policy rate from 5.50 percent down to 3.50 to 3.75 percent across 2024, and the 1Y followed the policy path closely. The 10Y stayed elevated in the 4.0 to 5.0 percent range through this period, supported by fiscal trajectory concerns, sticky long-run inflation expectations, and term premium expansion. The result is a normal recovery curve. Continued Fed cuts would steepen further; Fed hikes would re-flatten.