Glossary term
Credit Spread
The yield difference between corporate bonds and Treasuries; a primary stress gauge for risk assets.
A Credit Spread is the extra yield corporate bonds pay over comparable Treasuries, compensating investors for default risk. Widening spreads signal rising stress and tightening financial conditions, while narrow spreads reflect risk appetite and easy money. Credit spreads are a primary early-warning gauge for risk assets, often moving before equities recognize trouble. See Software-Credit Nexus 101.