1Y-Fed Funds Spread

This captures the bond market's bet on whether the Fed is about to cut rates. Negative readings mean investors are pricing in imminent cuts — typically because they see economic trouble coming that the Fed will need to respond to. Because it's tied to the current Fed Funds rate rather than long bonds, it reacts faster to shifting rate-cut expectations than the 10Y-3M yield curve and is considered a stronger near-term recession signal by recent Fed research.