The ten-year minus three-month spot rate on the ECB's yield curve fitted to AAA-rated euro-area government bonds. The inversion rule is imported from the United States: in the euro-area record the AAA curve inverted in 2008 only after the CEPR-dated peak, and did not invert before the 2011 recession.
Threshold source: Estrella and Mishkin (1996), applied to the ECB's AAA-rated spot curve. How thresholds are chosen
No clean hit in the record: since the ECB curve began in 2004 the rule has not led a euro-area recession. The AAA curve is dominated by Germany; peripheral spreads carry the stress that this series does not see.