The cost of corporate borrowing, in recent and historical context.
Why credit matters
A credit spread — the extra interest corporate borrowers pay above the U.S. Treasury — sets the cost of capital for the real economy. When spreads widen, businesses face higher borrowing costs across investment-grade companies, high-yield issuers, leveraged loans, commercial real estate, and small-business credit. Cheap credit fuels investment and expansion; expensive credit pulls them back. Watching spreads gives you a real-time read on the price of corporate borrowing for everything from large-cap refinancings to a small business taking out an equipment loan.
Spreads also typically move ahead of equity markets. Credit investors price default risk continuously; equity investors price growth and earnings. When the bond market starts demanding more premium for the same companies, that signal often shows up in credit weeks or months before it shows up in stocks.
Corporate borrowing costs vs Treasury · 90-day window
Daily close · U.S. Treasury par yields + ICE BofA US Investment-Grade and High-Yield Effective Yields and Option-Adjusted Spreads (via FRED)
10-Year Treasury reflects today's close (June 3). ICE BofA corporate indices publish with a one-business-day FRED lag — IG and HY values reflect June 2 close and trail the 10-Year by one session on the chart.
10-Year Treasury4.49%+3 bps from yesterday · +1 bps from 5 days ago
Investment-Grade Corporate5.14%flat from yesterday · flat from 5 days ago
IG OAS74 bps· +1 bps from yesterday · flat from 5 days ago
High-Yield Corporate6.88%−1 bps from yesterday · flat from 5 days ago
HY OAS271 bps· −1 bps from yesterday · flat from 5 days ago
The chart below plots yields — the visible gap between each corporate line and Treasury is a credit spread, conceptually. The OAS values shown above are the option-adjusted equivalents quoted on institutional desks: duration-matched to each corporate index and stripped of the option value embedded in callable bonds. The two measures run roughly 30 bps apart in high-yield because of those adjustments. Both describe credit risk; OAS is the canonical institutional number.
Source: U.S. Treasury (par yields), ICE BofA US Corporate Index Effective Yield (BAMLC0A0CMEY) and ICE BofA US High Yield Index Effective Yield (BAMLH0A0HYM2EY) via FRED. OAS values in the callout above sourced from ICE BofA US Corporate Index OAS (BAMLC0A0CM) and ICE BofA US High Yield Index OAS (BAMLH0A0HYM2) via FRED.
How to read this chart
The chart above shows three yields over the past 90 days. The 10-Year U.S. Treasury is what the U.S. government pays to borrow — the risk-free baseline. The Investment-Grade Corporate Index (IG) is what higher-rated corporate borrowers pay; the High-Yield Corporate Index (HY) is what lower-rated borrowers pay. All three are observable market prices.
The vertical space between each corporate line and the Treasury line is a credit spread, conceptually — the premium investors demand for default risk. (The OAS values in the callout above quote the same concept with institutional adjustments; see the note above the chart.) The IG spread is smaller (safer borrowers); the HY spread is larger (riskier borrowers). When the corporate lines pull away from Treasury, spreads are widening — investors are demanding more premium. When they converge, spreads are tightening.
Vertical markers indicate FOMC meeting dates. No attribution is made between meetings and credit moves. The chart shows what credit did; the markers show when the Fed met. The connection is for you to draw — or to cross-reference against the Market Internals and Report Breakdowns published on those dates.
Historical context
Credit ETF prices since 2007 · Major stress events labeled
LQD and HYG, weekly close, rebased to 100 on April 11, 2007 (HYG inception)
Credit ETFs today · June 3 close
LQDInvestment-Grade$108.62−0.28% today · −0.28% over 5 days
HYGHigh-Yield$79.68−0.28% today · −0.56% over 5 days
Source: Yahoo Finance daily closes for LQD (iShares iBoxx $ IG Corp Bond) and HYG (iShares iBoxx $ HY Corp Bond), weekly downsampled.
How to read this chart
This chart shifts metrics from the 90-day chart above: it shows the price of two credit ETFs — LQD (investment-grade) and HYG (high-yield) — since April 2007, rebased so both start at 100. Drawdowns from prior peaks are the visible story; troughs mark moments when bond markets repriced credit risk. Six major stress events are labeled. Read the depth of each drawdown as a rough measure of how worried investors got. Read the divergence between LQD and HYG during stress as the credit-quality story — HYG (riskier) typically falls farther than LQD (safer), and that gap is the dispersion stress creates.
One caveat to read directly off the chart: LQD's deepest drawdown is in 2022, not 2008. That trough was driven by Federal Reserve rate hikes (a duration repricing on long-dated investment-grade bonds), not by credit deterioration. HYG, with shorter duration and higher coupon, fell much less in 2022. The Fed-hiking marker labels this distinction explicitly.
The 90-day chart shows daily close data through the most recent available session for each series. Treasury par yields publish daily after market close, so the 10-Year line extends through today's close. The ICE BofA corporate indices publish with a one-business-day FRED lag, so the IG and HY lines typically stop one session earlier — visualizing the lag directly rather than truncating all three lines back to a common date. Yields on the 90-day chart are ICE BofA Index effective yield-to-worst, market-value-weighted across the IG and HY corporate universes. This is the same end-of-day evaluated-pricing methodology used by institutional fixed income desks, ETF NAV calculations, and Federal Reserve research. The OAS values in the callout above are sourced separately from FRED's ICE BofA Option-Adjusted Spread series (BAMLC0A0CM for IG, BAMLH0A0HYM2 for HY). OAS measures the same credit-risk premium as the visible chart gap, but adjusted for embedded-option value in callable bonds and matched against the full Treasury curve rather than the 10-Year alone — which is why OAS values run roughly 30 bps tighter than the visible gap in high-yield. The chart and the OAS callout are two views of the same underlying credit conditions: the chart for visualization, OAS for institutional-grade precision. Same-day data shown above the long-history chart reflects closing prices for LQD and HYG, sourced from Yahoo Finance. The long-history chart shows weekly closing prices for the same two ETFs, downsampled from daily candles since the HYG inception date of April 11, 2007, and rebased to a starting index value of 100 for both. Price is shown rather than total return, so the chart does not include dividend reinvestment — over a long horizon, total return is meaningfully higher than the indexed price line implies. The chart's editorial purpose is to show where stress moments lived historically; the drawdowns from prior peaks are what carry that signal. Event markers on the 90-day chart identify FOMC meeting dates; event markers on the long-history chart identify six major credit-market stress events (Lehman bankruptcy, European debt crisis, energy/commodity stress, COVID crash, Fed hiking cycle peak, regional bank stress) — no attribution is made between events and credit moves. The connection between an event and any subsequent move in credit conditions is for the reader to draw, or to cross-reference against the same date's Market Internals and Report Breakdowns.