High Yield Credit Spread — Historical Chart
BAMLH0A0HYM2The ICE BofA High Yield OAS measures extra yield investors demand to hold junk bonds over Treasuries. Widening spreads signal rising recession or credit risk; tightening signals strong risk appetite. Crosses 500 bps during recessions.
Related — Monetary Policy & Interest Rates
SOURCE: FEDERAL RESERVE ECONOMIC DATA (FRED) · 0 OBSERVATIONS
The high yield credit spread measures the extra yield investors demand to hold junk bonds (BB/B/CCC-rated) over comparable US Treasuries. It is one of the most sensitive leading indicators of financial stress — spreads above 500 basis points have historically coincided with recessions, and sudden widenings often precede equity market sell-offs.
Related Economic Indicators
Frequently Asked Questions
- What is the high yield spread?
- The high yield (HY) spread, or option-adjusted spread (OAS), is the additional yield that below-investment-grade bonds pay over comparable US Treasury yields. It compensates investors for credit risk (potential default) and liquidity risk. Wider spreads mean more perceived risk.
- When does the high yield spread predict recessions?
- Spreads above 500-600 bps (5-6 percentage points) over Treasuries have historically coincided with recessions or severe economic stress. During the 2008 crisis, spreads hit 2,000 bps. In healthy economies, spreads typically run 300-400 bps.
- Why do equity investors watch the HY spread?
- The HY market trades largely on the same fundamentals as equities — corporate earnings, default rates, economic growth. Widening HY spreads signal that sophisticated credit investors are pricing in higher default risk, which often leads equity markets lower.
- What causes high yield spreads to widen?
- HY spreads widen when: recession risk rises (increasing expected defaults), liquidity dries up (investors demand higher yields to hold illiquid bonds), risk appetite collapses (flight-to-quality out of credit into Treasuries), or specific sector stress emerges (energy sector in 2015-16).
Economic data sourced from the Federal Reserve Bank of St. Louis (FRED). Data is updated according to the release schedule of the issuing agency. Provided for informational purposes only and does not constitute investment advice.