The yield curve plots Treasury yields from short-term (3-month) to long-term (30-year) maturities. A normal upward-sloping curve indicates healthy economic expectations. Key patterns to watch: (1) Flattening — the spread between 2-year and 10-year narrows, signaling slowing growth expectations. (2) Inversion — short-term yields exceed long-term yields (2Y-10Y spread goes negative). This has preceded every U.S. recession since 1955 with only one false signal. (3) Steepening — often occurs after rate cuts begin, signaling recovery expectations. The 2Y-10Y spread is the most watched, but the 3M-10Y spread has the strongest historical predictive power for recessions. Track daily changes: a rapid flattening of 20+ basis points per month warrants close attention. The curve typically inverts 12-18 months before a recession begins.