Yes, you're ahead after Year 1 having bought the short-term bond with a higher rate, but now you have to find something to do with your cash for the next nine years, while your alter ego has the reliable income of the ten-year bond. You got more income but less predictability. If your options are poor after one year, you might end up behind over the decade. I don't understand why the animation plots the yield curve over time against the actual 3-month yield. The red line is the yield curve from March 2007, pretty closely matching the official numbers from that month, so I don't see why it's "estimated" or "implied." The gap between the 5-year rate in March 2007 (about 4.5%) is vertically contrasted with the March 2012 3-month rate (about 0.1%) and the "over-estimated area" between colored red. What is that supposed to represent? Five-year rates are not predictions of what three-month rates will be in five years. I love a prediction. Can we stipulate treasury.gov as an authorative source? They show rates of 2.92% for a two-year and 3.20% for a ten year T-bill, a gap of 0.28%. I don't know who calls the peak of a bull run, but NBER seems to have say-so over recession dating.Even if your bonds mature in the middle of a recession and you find yourself with cash and few good fixed-income options, at least you made some initial yield, no?
This is an animation showing the 3 month US treasury yield (blue line) versus the implied forward yield curve (red). The forward yield is estimated looking at the yields on 3, 6, 9 mo and 1, 2, 3, 5, 7 and 10 year government bonds. The blue highlighted area shows where the yield curve underestimated actual results and the ping highlighted area shows overestimations.
I place 70% confidence that a 10-year US Treasury compared to the 2-year US Treasury will invert sometime within a month of February 2019, and then within 12 months of that inversion we will see the peak of the bull run, and then 6 months from the peak will be a recession.... By the way, that differential today is .22%.