HY Credit Spreads

Monthly values

HY Credit Spreads — the last 12 months

Every month's reading, with the band the heatmap gives it. The chart above shows the same series in full.

Month	Value	Band
Sep 2026	270 bps	Very strong reading
Aug 2026	263 bps	Very strong reading
Jul 2026	285 bps	Very strong reading
Jun 2026	275 bps	Very strong reading
May 2026	274 bps	Very strong reading
Apr 2026	283 bps	Very strong reading

Month-end readings of the same series the chart shows, from hy_spreads. Values are the current record, not point-in-time: a month that has since been revised shows its revised value.

What is the HY Spreads?

High yield (HY) credit spreads measure the difference in yield between high-yield (junk) bonds and equivalent US Treasury bonds. When spreads widen, investors are demanding more compensation for credit risk — signaling rising financial stress. Spreads are one of the most reliable leading indicators of economic downturns.

How We Color-Code the HY Spreads

Our heatmap colors each indicator based on historically significant thresholds:

Below 300 bps

Very tight spreads — markets pricing in minimal credit risk. Risk-on environment.

300-400 bps

Normal spread environment. Credit markets functioning well.

400-500 bps

Moderately elevated spreads. Some credit stress emerging.

500-700 bps

Elevated stress. Historical level associated with economic slowdowns.

Above 700 bps

Severe financial stress. Levels seen during recessions and crises.

Historical Extremes — What Happened Next?

When this indicator reaches extreme levels, history shows consistent patterns:

Dec 2008GFC Peak

~2,000 bps

Credit markets froze during the financial crisis.

Mar 2020COVID Spike

~1,100 bps

Brief but sharp spike at pandemic onset.

2021Post-COVID Low

~280 bps

Historically tight spreads during peak stimulus era.

Investor Checklist — Current Reading

Based on the current HY Spreads reading of 270 bps (Very Positive):

✓Credit conditions are loose — favorable for risk assets

ℹLow spreads can precede complacency — monitor for sudden reversals

Frequently Asked Questions

What are high yield credit spreads?

High yield spreads measure the extra yield investors demand to hold junk bonds (rated BB+ or below) versus equivalent US Treasury bonds. A spread of 400 bps means junk bonds yield 4 percentage points more than Treasuries.

Why are credit spreads a leading recession indicator?

Credit markets often price in economic stress before it shows up in employment or GDP data. When companies' borrowing costs spike relative to Treasuries, it signals lenders expect more defaults — which typically precedes recession by 6-12 months.

What spread level signals a recession?

Spreads above 500 bps have historically been associated with recessions or near-recession conditions. The 2008 financial crisis saw spreads above 2,000 bps — extreme even by historical standards.

How do credit spreads relate to the stock market?

HY spreads and equity markets are strongly correlated — both measure risk appetite. Rapidly widening spreads almost always precede stock market corrections. They are sometimes called "the canary in the coal mine" for equity investors.

When do credit spreads signal a buying opportunity?

When spreads peak and begin narrowing from extreme levels (above 700-1000 bps), it historically signals the worst of the crisis is passing and represents a strong buying opportunity for both bonds and equities.