Rate Path
What bond prices say the Federal Reserve will do next, set against what it charges today.
Hikes expected, curve normal. Two-year Treasury 4.74% vs. Fed rate 3.875%. The market expects the Fed’s next move to be up. The yield curve is normal, and has been for 771 days. As of 2026-10-16.
Market line above the Fed's: hikes expected. Below: cuts expected.
The gap between them
Above zero: hikes expected. Below: cuts. Grey band: too close to call. 100bp = 1 percentage point; the Fed moves in steps of 25bp.
Above zero: normal, longer money pays more. Below zero: inverted, the market expects cuts later, a classic recession warning.
The full inversion record
How often a recession began within 12 months, per corner
History since 1976, not a forecast. n = independent readings: six recessions split four ways.
What this measures
Rate Path reads what the market expects the Federal Reserve to do from bond prices, not from statements or forecasts. The two-year Treasury is roughly a bet on where the Fed's rate will average over the next two years, so its gap to the Fed's rate today is the market's expected direction. The yield curve, ten-year minus two-year, shows whether longer money still pays more.
How to read it
Start with the summary card: which way the market expects the Fed to move, and whether the curve is normal or inverted. Market vs. Fed shows the two rates and the gap between them. Yield curve shows the spread back to 1976 and every inversion since. The map puts both readings together and shows how often a recession followed each combination.
Why the two-year note
It is the cleanest market-priced read on Fed policy available without futures data. Shorter bills are pinned close to the current rate; longer bonds carry so much else that the policy signal gets buried.
Which Fed rate
Today's reading uses the midpoint of the Fed's target range, the number people mean by "the Fed's rate". That range only exists from December 2008, so the history uses the effective fed funds rate, back to 1954. The two are never stitched into one line.
Why it is not a count of rate cuts
A two-year yield is the expected path of policy plus a term premium, what investors charge for tying money up. No two-year term premium estimate is published, so part of any gap cannot be attributed to the Fed, and this page never converts a gap into a number of moves.
How an inversion is counted
Dips below zero less than a month apart are joined, then anything shorter than a week is dropped. So the three-day inversion of August 2019 does not count, and the 2020 recession has no inversion against it: a pandemic shutdown is not something the curve saw coming.
Where the recession dates come from
The National Bureau of Economic Research, which dates a turning point six to eighteen months after it happens. Nothing derived from those dates is a live probability or feeds the current reading. Market Rotation also carries the curve, as one input among six, computed independently.