01A curve compares maturities at one time
The yield curve plots yield against maturity for comparable securities at the same observation date. The 2-year Treasury yield is often especially sensitive to the expected near-term policy path. The 10-year yield also contains expectations of future short rates plus a term premium compensating investors for holding duration. Inflation expectations, growth prospects, bond supply, demand and uncertainty can all affect it. A nominal yield is not the same as a real yield after inflation.
02Calculate the slope before naming the move
The 2s10s spread equals the 10-year yield minus the 2-year yield. A negative result is an inversion at those two points. Steepening means this spread becomes more positive, even if it remains negative. Flattening means it becomes less positive or more negative. Bull describes falling yields and rising bond prices; bear describes rising yields and falling bond prices. The level and slope are distinct dimensions of the curve.
03Four patterns, different stories
Bull steepening: short yields fall more than long yields, sometimes on expected cuts. Bear steepening: long yields rise more than short yields, possibly on inflation or term premium. Bull flattening: long yields fall more. Bear flattening: short yields rise more, possibly on tighter policy expectations. These are descriptions, not proven causes. An inversion can be a warning about expectations and policy tightness, but is neither a precise recession clock nor proof that every risk asset must immediately fall.