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Credit

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 (via FRED)
10-Year Treasury reflects today's close (May 15). ICE BofA corporate indices publish with a one-business-day FRED lag — IG and HY values reflect May 14 close and trail the 10-Year by one session on the chart.
10-Year Treasury 4.59% +12 bps from yesterday · +21 bps from 5 days ago
Investment-Grade Corporate 5.15% flat from yesterday · +4 bps from 5 days ago · 68 bps spread
High-Yield Corporate 6.91% −4 bps from yesterday · +6 bps from 5 days ago · 244 bps spread
10% 9% 8% 7% 6% 5% 4% 3% Feb 15 Mar 17 Apr 18 May 15 FOMC · Mar 17–18 FOMC · Apr 28–29 HY IG 10Y
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.

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 the credit spread for that tier — the premium investors demand for default risk. 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)
Here's what credit ETFs did today · May 15 close
LQD Investment-Grade $107.86 −0.64% today · −1.23% over 5 days
HYG High-Yield $79.46 −0.49% today · −0.85% over 5 days
120 110 100 90 80 70 60 50 2007 2010 2015 2020 2025 Lehman · Sept '08 Euro crisis · Oct '11 Energy · Feb '16 COVID · Mar '20 Fed hiking · Oct '22 SVB · Mar '23 LQD HYG
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. Spread calculations in the table above use the most recent date where both Treasury and ICE BofA data exist. 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. 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.