Yield curve re-steepening
After months of inversion, the curve eventually normalizes — long yields rise back above short ones. Counterintuitively, this 're-steepening' is historically a *worse* omen than the inversion itself: it typically happens because the Fed is cutting in response to deteriorating conditions.
Two ways to steepen
Bull steepening: short rates collapse because cuts are underway — the recessionary path, seen in 2001, 2007–08, and 2020. Bear steepening: long rates rise on term-premium or inflation repricing — less reliably ominous. Which kind of steepening is happening matters as much as the steepening itself.
The historical pattern
In most post-war cycles, inversion gave the early warning and re-steepening announced the recession's actual proximity — often firing just before or around the onset. That's why this site treats re-steepening as its own signal rather than celebrating an inverted curve 'healing'.