Credit spreads are the best available read on the environment in which an allocation to something unfamiliar either gets approved or does not. When risk is cheap, committees say yes to things they would otherwise defer.
2.84pts
High yield spread, 30 December 2025
0.79pts
Investment grade spread
17%
Percentile against its own three years
−10bp
Change over sixty days
Source: Federal Reserve Bank of St. Louis (FRED). Computed by Institutional Asset Journal.
US high yield option-adjusted spread
Daily, percentage points over Treasuries.
Source: Federal Reserve Bank of St. Louis (FRED). Computed by Institutional Asset Journal.
The series was last at or below this level on 24 December 2025.
What the curve is telling an allocator
The spread between two-year and ten-year yields prices the path of policy against the term premium. It is not a forecast and it has been wrong about recessions, but it is the market’s own summary of what money will cost over the horizon most allocations are sized against, and it moves before the data does.
How this was measured
- Series are taken from the Federal Reserve Bank of St. Louis via its public CSV endpoint, which needs no key and returns the full published history. Treasury yields are constant-maturity par yields, not the yield on any particular security. The ten-year inflation-indexed series is the real yield used here as a hurdle rate; the breakeven is the difference between it and the nominal. Option-adjusted spreads are ICE BofA index levels. A piece dated one day reads the most recent observation on or before the day before, because these series publish with a lag, and every figure names the date it belongs to. Observations are not carried forward across holidays.
