OverUnder Yield Spread

🗺️ OverUnder is a structural regime visualizer, engineered to diagnose the shape, tone, and trajectory of the yield curve. Rather than signaling trades directly, it informs traders of the world they’re operating in. Yield curve steepening or flattening, normalizing or inverting — each regime reflects a macro pressure zone that impacts duration demand, liquidity conditions, and systemic risk appetite. OverUnder abstracts that complexity into a color-coded compression map, helping traders orient themselves before making risk decisions. Whether you’re in bonds, currencies, crypto, or equities, the regime matters — and OverUnder makes it visible.

🧠 Core Logic

Built to show the slope and intent of a selected rate pair, the OverUnder Yield Spread defaults to 🇺🇸US10Y-US2Y, but can just as easily compare global sovereign curves or even dislocated monetary systems. This value is continuously monitored and passed through a debounce filter to determine whether the curve is:

• Inverted, or
• Steepening

If the curve is flattening below zero: the world is bracing for contraction. Policy lags. Risk appetite deteriorates. Duration gets bid, but only as protection. Stocks and speculative assets suffer, regardless of positioning.

📍 Curve Regimes in Bull and Bear Contexts

• Flattening occurs when the short and long ends compress. In a bull regime, flattening may reflect long-end demand or fading growth expectations. In a bear regime, flattening often precedes or confirms central bank tightening.

• Steepening indicates expanding spread. In a bull context, this may signal healthy risk appetite or early expansion. In a bear or crisis context, it may reflect aggressive front-end cuts and dislocation between short- and long-term expectations.

• If the curve is steepening above zero: the world is rotating into early expansion. Risk assets behave constructively. Bond traders position for normalization. Equities and crypto begin trending higher on rising forward expectations.

🖐️ Dynamically Colored Spread Line Reflects 1 of 4 Regime States

• 🟢 Normal / Steepening — early expansion or reflation
• 🔵 Normal / Flattening — late-cycle or neutral slowdown
• 🟠 Inverted / Steepening — policy reversal or soft landing attempt
• 🔴 Inverted / Flattening — hard contraction, credit stress, policy lag

🍋 The Lemon Label

At every bar, an anchored label floats directly on the spread line. It displays the active regime (in plain English) and the precise spread in percent (or basis points, depending on resolution). Colored lemon yellow, neither green nor red, the label is always legible — a design choice to de-emphasize bias and center the data.

🎨 Fill Zones

These bands offer spatial, persistent views of macro compression or inversion depth.

• Blue fill appears above the zero line in normal (non-inverted) conditions
• Red fill appears below the zero line during inversion

🧪 Sample Reading: 1W chart of TLT

OverUnder reveals a multi-year arc of structural inversion and regime transition. From mid-2021 through late 2023, the spread remains decisively inverted, signaling persistent flattening and credit stress as bond prices trended sharply lower. This prolonged inversion aligns with a high-volatility phase in TLT, marked by lower highs and an accelerating downtrend, confirming policy lag and macro tightening conditions.

As of early 2025, the spread has crossed back above the zero baseline into a “Normal / Steepening” regime (annotated at +0.56%), suggesting a macro inflection point. Price action remains subdued, but the shift in yield structure may foreshadow a change in trend context — particularly if follow-through in steepening persists.

🎭 Different Traders Respond Differently:

• Bond traders monitor slope change to anticipate policy pivots or recession signals.
• Equity traders use regime shifts to time rotations, from growth into defense, or from contraction into reflation.
• Currency traders interpret curve steepening as yield compression or divergence depending on region.
• Crypto traders treat inversion as a liquidity vacuum — and steepening as an early-phase risk unlock.

🛡️Can It Compare Different Bond Markets?

Yes — with caveats. The indicator can be used to compare distinct sovereign yield instruments, for example:

• 🇫🇷FR10Y vs 🇩🇪DE10Y - France vs Germany
• 🇯🇵JP10Y vs 🇺🇸US10Y - BoJ vs Fed policy curves

However:

🙈 This no longer visualizes the domestic yield curve, but rather the differential between rate expectations across regions
🙉 The interpretation of “inversion” changes — it reflects spread compression across nations, not within a domestic yield structure
🙊 Color regimes should then be viewed as relative rate positioning, not absolute curve health

🙋🏻 Example: OverUnder compares French vs German 10Y yields

1. 🇫🇷 Change the long-duration ticker to FR10Y
2. 🇩🇪 Set the short-duration ticker to DE10Y
3. 🤔 Interpret the result as: “How much higher is France’s long-term borrowing cost vs Germany’s?”

You’ll see steepening when the spread rises (France decoupling), flattening when the spread compresses (convergence), and inversions when Germany yields rise above France’s — historically rare and meaningful.

🧐 Suggested Use

OverUnder is not a signal engine — it’s a context map. Its value comes from situating any trade idea within the prevailing yield regime. Use it before entries, not after them.

• On the 1W timeframe, OverUnder excels as a macro overlay. Yield regime shifts unfold over quarters, not days. Weekly structure smooths out rate volatility and reveals the true curvature of policy response and liquidity pressure. Use this view to orient your portfolio, define directional bias, or confirm long-duration trend turns in assets like TLT, SPX, or BTC.

• On the 1D timeframe, the indicator becomes tactically useful — especially when aligning breakout setups or trend continuations with steepening or flattening transitions. Daily views can also identify early-stage regime cracks that may not yet be visible on the weekly.

• Avoid sub-daily use unless you’re anchoring a thesis already built on higher timeframe structure. The yield curve is a macro construct — it doesn’t oscillate cleanly at intraday speeds. Shorter views may offer clarity during event-driven spikes (like FOMC reactions), but they do not replace weekly context.

Ultimately, OverUnder helps you decide: What kind of world am I trading in? Use it to confirm macro context, avoid fighting the curve, and lean into trades aligned with the broader pressure regime.