UK gilt yield curve: the 10-year minus 2-year spread
The gilt yield curve compares UK government borrowing yields across maturities. Its shape provides context about market pricing, but it cannot confirm a future recession.
Explore Recession indicators charts ↗What the 10y–2y spread measures
The spread subtracts the two-year nominal gilt yield from the ten-year nominal gilt yield on the same date. If the ten-year yield is 4.4% and the two-year yield is 4.0%, the spread is +0.4 percentage points, or 40 basis points. These are illustrative numbers.
A negative spread is called an inversion: the two-year yield is higher than the ten-year yield. A positive spread means the ten-year yield is higher. The spread can change because either yield moves, so checking both inputs helps explain the result.
Which yields GB Nomics uses
GB Nomics calculates par yields from the Bank of England nominal discount curve for its gilt indicators. The 10y–2y model uses matching observation dates from the two-year and ten-year series. These are estimated curve-based par yields, not necessarily the traded yield of a particular bond.
A par yield, a zero-coupon spot yield and a forward rate describe different objects. Combining unlike yield definitions can produce a misleading spread. The dashboard uses a consistent par-yield basis for the two inputs.
Reading the model and the full curve
Open Model Lab → Business Cycle & Recession for the historical spread and its zero reference line. Open BoE for individual maturities and the full yield curve. The latter shows the cross-section of maturities for its stated date; it is not a time series of one bond.
Inversion is a warning sign to investigate alongside output, employment and other evidence. There is no fixed countdown from inversion to recession. A curve can also steepen after inversion as short yields fall, so a return to a positive spread is not by itself an all-clear.
Why the standardised chart has a different zero
The actual spread chart uses zero to mark equal ten-year and two-year yields. The Model Chart’s zero instead marks the fitted trend after detrending and standardisation. A negative standardised score does not necessarily mean an inverted curve.
Changes in the chosen history affect the fitted trend. The model uses current source histories, not a reconstruction of every historical release, and does not estimate a recession probability.
Sources and methodology
General educational information, not personal investment advice. Examples are illustrative. The dashboard’s observations and freshness checks determine which current charts are available.