About

Extra yield lenders demand to hold corporate debt instead of Treasuries, tracked over time as credit-market stress. Uses the ICE BofA high-yield option-adjusted spread via FRED.

Instructions

Watch spreads for early risk-off. Treat a jump while equities still rise as the combination that has preceded drawdowns. Pair the move with equity breadth when spreads widen and breadth narrows.

Signals

• TIGHT - Spreads are unusually compressed. Credit is pricing little default risk.
• NORMAL - Spreads sit in their historical average range.
• Early Stress - Spreads are starting to widen (regime code WIDE).
• Elevated Stress - Spreads are at historically elevated levels (regime code STRESS).