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zdmre
Mar 29, 2022 12:34 PM

10-2 Year Treasury Yield Spread by zdmre 

NASDAQ 100 IndexNASDAQ

Description

Long-term bond yield reflects inflation. Short-term bond yields are tools used to predict Fed's interest rate policy. Spread between the two represents four cycles of an economy.

1. Growth
Short-term yield rises as interest rates rise. Spread narrows.

2. Slow growth
Central bank raises interest rates faster and short-term yield exceeds long-term yield. Spread turns negative.

3. Recession
High interest rates lead to more defaults. Inflation caps consumption. Central bank lowers interest rate to stimulate the economy and short-term yield falls. Spread widens.

4. Recovery
Central bank continues easing. Spread remains wide and yield curve remains steep.

0 = Recession Risk
2.6 = Recovery Plan

DYOR

Release Notes

Added
  • 10y-3y
    10y-5y
    30y-2y
    30y-5y

Comments
UnknownUnicorn16043985
This is really interesting. It looks like any signal, either a green dot or a red dot, represents either a top or a bottom. It could be either, but it's likely one or the other. @zdmre
Simon_says
Thank you very much for the open-source indicator. It's a very interesting tool!
zdmre
@Simon_says, Thank you, I hope it helps.
diegobelmonte
wow, can you replace the 2/10 plot with an RSI and keep everything the same with the shapes? and use the 30/70 targets ? very cool indicator
zdmre
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