IG corporate spread proxy (10Y corporate − 10Y Treasury) — RiskCurve
Our investment-grade credit spread proxy is —% as of the latest available date, unchanged versus the previous reading. It is a proxy, not an index quote: we take the High Quality Market 10-year corporate spot rate published by the U.S. Treasury (FRED series HQMCB10YR) and subtract the 10-year Treasury yield (DGS10), matched to the same month-end date.
A credit spread is the purest market price of default risk. Treasuries are treated as default-free, so anything a corporate bond pays above their yield is compensation for the chance the borrower fails to pay. Because the HQM curve is published monthly and covers high-quality issuers, this proxy tracks investment-grade risk with a monthly cadence and a modest lag.
Spreads widen when investors get nervous — recessions, credit events, funding shocks — and compress when they feel confident. The warning sign is rarely a high level on its own but a rapid widening, which has historically preceded equity drawdowns and tighter lending conditions. We pair the proxy with two independent stress measures: the Chicago Fed credit subindex (weekly) and the St. Louis Fed Financial Stress Index (weekly), so a widening proxy can be cross-checked against a broader read on financial conditions.
For portfolio construction, credit spreads set the compensation for taking corporate risk and inform the choice between credit and duration. We track credit and financial stress on the RiskCurve dashboard.