# U.S. Treasury Yield Spread Narrows to 17 Basis Points Near Inversion

By Enna Lee

Canonical URL: https://www.tokenpost.com/news/investing/24697
Published: 2026-09-28T02:24:50.000Z
Updated: 2026-09-28T02:24:50.000Z
Section: Investing

> The two-year yield rose faster as markets priced in at least three more Federal Reserve rate hikes over the next year, while the 10-year yield stayed near its highest level since 2007.

The spread between two-year and 10-year Treasury yields narrowed to 17 basis points last week, renewing concerns that monetary policy could become too restrictive even as recession remains unconfirmed.

The gap was the narrowest since early 2025. The two-year yield stood at about 4.9%, while the 10-year yield was around 5.2% and remained near its highest level since 2007.

Short-term yields have risen faster as markets priced in at least three additional 25-basis-point Federal Reserve rate hikes over the next year. The move has brought the yield curve close to inversion, a condition in which shorter-term yields exceed longer-term yields.

An inverted two-year, 10-year spread preceded all eight U.S. recessions since the 1960s. The inversion occurred an average of about 15 months before those downturns, with the lead time ranging from six months to two years. The 2022 inversion had not been followed by a recession.

The flattening curve has also affected bank stocks. The KBW Bank Index entered technical correction territory last week after declining 10% from its recent high.

The 17-basis-point spread more directly reflects renewed concern that monetary policy could become too restrictive than a determination that a recession is imminent.

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- [10-year yield](https://www.tokenpost.com/news/investing/23603)