Treasury Yield Spreads

When short rates exceed long rates (spread below zero), the curve is inverted: markets expect rate cuts ahead, historically because a recession forces them. Inversion has preceded every US recession for half a century.

The nuance the chart shows: recessions historically start not at inversion but at the re-steepening — when the spread races back above zero as the Fed cuts into weakness. For crypto, the steepening phase has coincided with the liquidity turns that end bear markets.