Dynamic Yield Curve: How to Use It and What Followed Each Inversion
How the StockCharts tool links the Treasury curve to the S&P 500, what normal, flat and inverted shapes mean, and the four long inversions since 1990 with the dates and index moves that followed.
On this page
The dynamic yield curve is a free interactive chart published by StockCharts: on November 2, 2026 it opened and drew the curve without logging in. It draws the Treasury yield curve for one date and, next to it, the S&P 500 over the years, so you can move through time and watch the curve change shape as stocks rise and fall. In StockCharts' own words, the chart "shows the relationship between interest rates and stocks over time" (StockCharts, Dynamic Yield Curve). This guide explains what the curve is, how to use the tool, what the normal, flat and inverted shapes mean, and what the inversions since 1990 were followed by, with Treasury yields and the dates of each episode.
What the yield curve shows
A yield curve plots the yield of bonds from the same issuer against their maturity, from the shortest on the left to the longest on the right. The usual reference is the curve built by the US Treasury every business day for maturities from 1 month to 30 years. The Treasury bases it on indicative bid-side quotations of recently auctioned securities and fits the points with a monotone convex method (Treasury, yield curve methodology). The yields are par yields, quoted in percent a year.
Two dates show how much the shape can change:
Treasury par yields by maturity, two dates
- Dec 29, 2023
- Oct 30, 2026
At the end of 2023 the curve was inverted: the 3 month bill yielded 1.52 points more than the 10 year note. On October 30, 2026, the latest date published when we read it, the curve sloped upward from 1 month to 20 years (5.34%), with the 30 year slightly below the 20 year; the 10 year was 0.78 point above the 3 month bill and 0.38 point above the 2 year note. Source: the Treasury daily par yield curve rates.
How to use the dynamic yield curve
The StockCharts page shows the yield curve next to a chart of the S&P 500. The controls, as the page and the StockCharts help center describe them:
- Pick a date on the S&P 500 chart. Clicking a point on the index shows the yield curve as it was on that date.
- Drag along the index to watch the curve change shape day after day.
- Use the trail length slider to keep the curves of the preceding days on screen, so the direction of the change is visible.
- Press Animate to play the history without dragging.
- Take a snapshot to lock the curve of the current date on screen, in dark red, and compare it with the curve of another date.
The tool answers questions of the form "what did the curve look like when the index peaked?" or "how long did the curve stay inverted before stocks fell?". It does not compute a signal and does not say what comes next.
Normal, flat and inverted curves
Normal, flat and inverted yield curves
- Normal (upward sloping): long maturities yield more than short ones. Lenders ask more to tie up money for longer, and the market does not expect short rates to fall much.
- Flat: short and long yields are close. The curve often passes through this shape on its way from normal to inverted or back.
- Inverted (downward sloping): short maturities yield more than long ones. Short yields follow the central bank's policy rate, which moves with a dovish or hawkish stance; long yields fall below them when the market expects rates to come down later, often because it expects the economy to slow.
- Humped: middle maturities yield more than both ends. The late October 2026 curve is not humped: it only dips slightly at the very end, with the 30 year below the 20 year.
Two moves are named after the gap between long and short yields, the spread: a steepening widens it, a flattening narrows it. Watching the spread change is the main use of the animation.
Yield curve inversions since 1990 and what followed
A New York Fed study of the curve, by Arturo Estrella and Frederic Mishkin (1996), found that the spread between the 10 year note and the 3 month bill "significantly outperforms other financial and macroeconomic indicators in predicting recessions two to six quarters ahead" (Federal Reserve Bank of New York, Current Issues, June 1996). Using that spread, we listed every spell of at least 40 trading days in which the 10 year yielded less than the 3 month bill, from the Treasury's daily data from January 1990 to October 2026, and looked up the next business cycle peak dated by the NBER (NBER business cycle dates).
| 10 year minus 3 month below zero | Next NBER peak | S&P 500 from the first day |
|---|---|---|
| Jul 19, 2000 to Jan 19, 2001, 127 trading days, low −0.95 | March 2001 | −9.4% after 6 months, −18.0% after 12, −42.8% after 24 |
| Jul 19, 2006 to May 29, 2007, 217 trading days, low −0.64 | December 2007 | +13.5% after 6 months, +23.3% after 12, 0.0% after 24 |
| May 23 to Jul 22, 2019 (41 days) and Jul 24 to Oct 10, 2019 (56 days), low −0.52 | February 2020 | +11.0% after 6 months, +6.0% after 12, +48.7% after 24 |
| Oct 25, 2022 to Dec 12, 2024, 534 trading days, low −1.89 on May 4 and Jun 1, 2023 | None dated: the NBER chronology lists no peak after February 2020 | +5.5% after 6 months, +8.5% after 12, +50.5% after 24 |
S&P 500 after the start of each long inversion
- 12 months later
- 24 months later
The S&P 500 changes are price changes of the index, without dividends, from its close on the first day of the inversion to its first close on or after the same date 6, 12 and 24 months later. Our data start in 1990, so earlier inversions are not in the table. Shorter spells were left out: 36 of them, the longest 18 trading days, among them three spells of 10 trading days or more in 2025.
Four episodes are far too few to draw a rule from, and they do not agree with each other. After the 2000 inversion the index was 18.0% lower a year later; after the 2006 inversion the index rose for more than a year before the 2007 top; the February 2020 peak came after the 2019 inversion, about four months after it ended; the longest and deepest inversion of the period, from 2022 to 2024, has no dated recession behind it so far, and the index rose more than 50% over the next two years. The curve can describe the market's expectations for rates; it does not give a date for a top in stocks.
Which spread to watch
Two spreads are quoted most often: the 10 year minus the 2 year note and the 10 year minus the 3 month bill, the one used by Estrella and Mishkin. They can give different dates. In our data the 10 year minus 2 year spread, after a two-day dip in April 2022, stayed negative for 537 trading days from July 6, 2022, 77 trading days before the long inversion of the 10 year minus 3 month spread began on October 25.
Trading days from the 10y minus 2y inversion to the 10y minus 3m one
In 2006 the order was reversed for the long spells: the 10 year minus 3 month spread stayed negative from July 19, the 10 year minus 2 year spread only from August 17, 21 trading days later. The 2 year had given an earlier signal, though: a few days below zero at the end of December 2005, then 25 trading days from January 31, 2006, while the 10 year minus 3 month spread had only dipped for a few days in January and February. In 2000 the 10 year minus 2 year spread led by 109 trading days, from February 11 against July 19. In 2019 it was negative for three days in August only, with no long spell. In 1998 it was negative for 18 trading days in a row from June 15, while the 10 year minus 3 month spread never stayed negative for more than two days that year. When you compare a statement about "the inversion", check which spread it uses.
For more guides on markets and rates, see trading concepts.
Frequently asked questions
What is the dynamic yield curve?
A free interactive chart on StockCharts that shows the Treasury yield curve for a chosen date next to the S&P 500. You can drag along the index, keep a trail of past curves on screen or animate the history to see how the shape of the curve changed as stocks moved.
What does an inverted yield curve mean?
Short-term Treasury yields are higher than long-term ones. Short yields follow the central bank's policy rate; when long yields fall below them, the market is pricing lower rates later, often because it expects growth to slow.
Does an inverted yield curve mean stocks will fall?
Not on any fixed schedule. Of the four long 10 year minus 3 month inversions since 1990, three were followed by a higher S&P 500 one year later, and the longest one, from 2022 to 2024, was followed by a rise of more than 50% over two years.
Is the yield curve inverted now?
Not on October 30, 2026: the 10 year note yielded 4.94%, 0.78 point above the 3 month bill (4.16%) and 0.38 point above the 2 year note (4.56%), according to the Treasury's daily par yield curve.
Where does the yield curve data come from?
The US Treasury publishes the daily par yield curve for maturities from 1 month to 30 years, built from indicative bid-side quotations of recently auctioned securities.
Sources
- StockCharts, Dynamic Yield Curve
- US Treasury, Daily Treasury Par Yield Curve Rates, 2026
- US Treasury, Treasury Yield Curve Methodology
- Estrella and Mishkin, The Yield Curve as a Predictor of U.S. Recessions, Current Issues in Economics and Finance, Federal Reserve Bank of New York, June 1996
- NBER, US Business Cycle Expansions and Contractions
- StockCharts Help, Dynamic Yield Curve
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