IG vs HY Spread
The relative stress between credit tiers · Quotes delayed up to 5 minutesA calculated metric showing the gap between high-yield and investment-grade credit spreads — the relative stress between the two tiers of corporate credit. Computed as HY spread minus IG spread. A widening gap means high-yield borrowers are experiencing disproportionate stress relative to investment-grade; a compressing gap means stress is either broad-based or that HY is normalizing relative to IG.
Analyst's Note
The IG-vs-HY gap is a regime indicator. When the gap is stable and moderate (roughly 2–3%), credit conditions are normal and stress is proportional across quality tiers. When the gap expands sharply (above 4–5%), lower-quality borrowers are facing disproportionate funding stress — the market is discriminating aggressively between quality tiers, which is a sign of selective risk aversion. When the gap compresses below 2%, the market is either very complacent (pricing minimal default risk across the board) or very stressed (both tiers widening together in a broad-based selloff). The chart uses the platform’s calculated-series infrastructure to compute HY minus IG in real time. Data is limited to approximately three years due to FRED’s May 2023 restructuring of the underlying ICE BofA series. For the gold investor, the gap dynamics add nuance to credit stress analysis: broad-based stress (both IG and HY widening, gap stable) is more systemically significant than concentrated stress (HY widening, IG steady), and systemically significant stress is the regime most supportive of gold.
A calculated metric showing the gap between high-yield and investment-grade credit spreads — the relative stress between the two tiers of corporate credit. Computed as HY spread minus IG spread. A widening gap means high-yield borrowers are experiencing disproportionate stress relative to investment-grade; a compressing gap means stress is either broad-based or that HY is normalizing relative to IG.
Analyst's Note
The IG-vs-HY gap is a regime indicator. When the gap is stable and moderate (roughly 2–3%), credit conditions are normal and stress is proportional across quality tiers. When the gap expands sharply (above 4–5%), lower-quality borrowers are facing disproportionate funding stress — the market is discriminating aggressively between quality tiers, which is a sign of selective risk aversion. When the gap compresses below 2%, the market is either very complacent (pricing minimal default risk across the board) or very stressed (both tiers widening together in a broad-based selloff). The chart uses the platform’s calculated-series infrastructure to compute HY minus IG in real time. Data is limited to approximately three years due to FRED’s May 2023 restructuring of the underlying ICE BofA series. For the gold investor, the gap dynamics add nuance to credit stress analysis: broad-based stress (both IG and HY widening, gap stable) is more systemically significant than concentrated stress (HY widening, IG steady), and systemically significant stress is the regime most supportive of gold.
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