Yield Curve vs Leading Economic Index
10Y-2Y Treasury spread (FRED T10Y2Y) measures yield curve shape. Conference Board LEI (FRED USSLIND) aggregates 10 leading indicators.
Also known as: 10Y-2Y Yield Spread (yield curve, yield spread, 10-2 spread, 2s10s) · Leading Index for US (LEI, leading index, leading indicators)
Why This Comparison Matters
10Y-2Y Treasury spread (FRED T10Y2Y) measures yield curve shape. Conference Board LEI (FRED USSLIND) aggregates 10 leading indicators. April 2026: 10Y-2Y spread approximately +31bp (10Y 4.31% minus 2Y 4.00%; re-steepened from -110bp peak inversion July 2023). LEI six-month change -1.3% (annualized through January 2026, latest pre-shutdown). Both classic recession indicators flashed warnings 2022-2024. Yield curve inversion peaked -110bp (deepest since 1981). LEI declined 24 consecutive months March 2022-April 2024 (longest streak since GFC). Recession did not arrive. April 2026: yield curve normalized, LEI decline rate moderating. Both indicators in process of false-positive resolution.
The April 2026 Configuration
10Y-2Y spread: ~+31bp (April 2026, 10Y 4.31% minus 2Y 4.00%). Positive (re-steepened). Compares to peak inversion -110bp July 2023 (highest since 1981).
LEI six-month change: -1.3% (through January 2026, latest pre-shutdown). Improvement from -2.6% (January-July 2025) and -7.6% (early 2024).
Both indicators flashed major recession warnings 2022-2024. April 2026: both in process of normalization without recession arriving.
The combined April 2026 reading: both classic recession indicators false-positive in this cycle. Yield curve inversion 24 months (longest in modern history) without recession. LEI decline 24 consecutive months without recession. Sahm Rule triggered July 2024 + 21+ months without recession.
All three traditional recession indicators (yield curve + LEI + Sahm Rule) gave false signals 2022-2026. Most divergent setup in modern history. Cross-asset markets price soft landing.
Long-Term Range and Recent Trajectory
Yield curve trajectory: 2022-2023 inversion peaked -110bp July 2023. Inversion duration 24 months (July 2022 - mid-2024). 2024-2026 re-steepening: from -110bp to +31bp (140bp re-steepening).
LEI trajectory: peaked early 2022 at ~120 (1992=100). Declined ~16% peak-to-current (April 2026 ~101). Six-month annualized: peaked at -7.6% early 2024, -2.6% mid-2025, -1.3% January 2026 (improving).
Historical 10Y-2Y range: -110bp (peak inversion 2023) to +275bp (peak steepness 2003-2004). Currently +31bp (mid-range).
Historical LEI six-month range: -10% (recession territory, 2008-09) to +10% (early-cycle, 2010, 2021). Currently -1.3% (mid-decline territory).
Current positioning: both indicators in normalization. Yield curve back to positive. LEI decline rate moderating. No recession arrived despite multiple warnings.
Historical Precedents: Past Episodes
2008-09 GFC: yield curve inverted 2006 -25bp peak (mild). LEI six-month -10% peak. Recession December 2007-June 2009. Both indicators agreed, recession confirmed.
2020 COVID: yield curve briefly inverted 2019. LEI six-month -26% peak (March 2020). Recession Q1-Q2 2020. Sudden shock disrupted both indicators.
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Frequently Asked Questions
What is the April 2026 yield curve vs LEI configuration?+
10Y-2Y spread +31bp (re-steepened from -110bp peak inversion July 2023, deepest since 1981). LEI six-month change -1.3% (through January 2026, latest pre-shutdown; improving from -7.6% early 2024). Both classic recession indicators flashed warnings 2022-2024 + recession did not arrive 21+ months past Sahm Rule trigger July 2024 (longest divergence in 54-year history). Both indicators in process of false-positive resolution.
How do these two indicators relate?+
Yield curve and LEI capture different aspects: curve reflects market expectations about future rates, LEI aggregates real economic data. When both flash warnings simultaneously (2022-2024), signal is much stronger. When they diverge, context matters. Note: yield curve spread itself is one of LEI 10 components, creating partial feedback loop. Yield curve normalization 2024-2026 partially explains LEI improvement.
What are the LEI 10 components?+
Conference Board LEI components: (1) average weekly hours manufacturing, (2) initial claims (225K neutral), (3) ISM new orders index, (4) building permits (6.5% mortgage headwind), (5) S&P 500 stock prices (record tailwind), (6) leading credit index, (7) interest rate spread 10Y minus fed funds (currently +69bp tailwind), (8) consumer expectations (Michigan 4.7% pessimistic headwind), (9) leading indicator average workweek services, (10) leading indicator nondefense capital goods orders ex-aircraft.
Why did both indicators fail to predict recession in this cycle?
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.