The 2Y3M yield spread spiked twice in the early 1980s and another 4 times since then. Two of the spikes occurred with the 3-month treasury yield rising, in 1987 (leading into the crash) and 1994. The latter saw flat stocks and the bankruptcy of Orange County. The other two spikes occurred at the end of the 2000s bear market (March 2002) and in late 2008. A less pronounced spike in 2004 also saw stocks take a breather.
Since this is an unprecendented situation, it is more difficult to predict. Yet, there's a clear probability here. Spiking 2Y3M spreads range from really bad situtions including the 1987 crash, to years where stocks were down or flat for most of the year in 1994 and 2004.
1987 is the best fit analog for Fed policy, direction of rates. There is no precedent for the currently unprecedented situation of exiting QE amid high inflation.
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