A widely tracked recession signal is back in focus: the spread between the 10-year Treasury yield and the 3-month Treasury yield has recently turned positive after a period of inversion.

### Why markets care about this spread

- When short rates rise above long rates (an inversion), it often reflects tight policy and expectations of slower growth.

- Historically, when the spread later reverts back to positive, it can indicate the Fed has begun easing—sometimes just ahead of a downturn.

### Historical context

The source article notes that this inversion-then-reversion pattern occurred ahead of each of the last four recessions. It’s not a timing tool—lead times can vary widely—but it’s one reason investors start re-pricing risk when the curve’s shape changes.

### Cross-checks investors are watching in 2026

Alongside the yield-curve signal, markets typically monitor:

- labor-market momentum (job growth, openings, unemployment trend)

- consumer spending resilience

- credit conditions and delinquency rates

- fiscal policy and the pace of government spending

### What it could mean for stocks

If recession odds rise, the market narrative often shifts toward:

- defensives vs. cyclicals rotation

- earnings estimate cuts

- a greater premium placed on balance-sheet strength and free cash flow

Source: Nasdaq (The Motley Fool)