The Yield Curve & Rate Spreads
What the slope and shape of the curve signal — and why 2s10s and 10s3m matter.
The yield curve plots yields across maturities. Its level, slope, and curvature each carry information.
Key spreads
- 2s10s (10Y − 2Y): the classic slope measure. Positive = upward-sloping; negative = inverted, historically a recession signal.
- 10s3m (10Y − 3M): the Fed's preferred recession indicator; closely tied to policy expectations.
Curve moves, named
- Bull steepener — short rates fall faster than long (front-end rally); often eases funding pressure.
- Bear steepener — long rates rise faster than short.
- Bull flattener — long rates fall faster than short.
- Bear flattener — short rates rise faster than long; classic tightening-cycle move.
Why it matters for a balance sheet
Banks and credit unions are typically positively gapped — they borrow short and lend long. A steeper curve widens the spread between funding cost and asset yield; a flat or inverted curve compresses it and pressures NIM.
How PhxIQ relates
The dashboard surfaces 2s10s and 10s3m directly, with day-over-day basis-point changes. The briefing names the move (steepener/flattener) and ties it to funding and NII.