Moody's Seasoned Baa Corporate Bond Minus Federal Funds Rate
BAAFF • Economic Data from Federal Reserve Economic Data (FRED)
Latest Value
1.61
Year-over-Year Change
-12.50%
Date Range
10/6/2021 - 8/5/2025
Summary
The Moody's Seasoned Baa Corporate Bond Minus Federal Funds Rate measures the spread between corporate bond yields and the federal funds rate, indicating the risk premium for medium-grade corporate debt. This metric provides insight into credit market conditions and overall economic sentiment.
Analysis & Context
This economic indicator provides valuable insights into current market conditions and economic trends. The data is updated regularly by the Federal Reserve and represents one of the most reliable sources for economic analysis.
Understanding this metric helps economists, policymakers, and investors make informed decisions about economic conditions and future trends. The interactive chart above allows you to explore historical patterns and identify key trends over time.
About This Dataset
This economic indicator represents the difference between Moody's Baa-rated corporate bond yields and the federal funds rate, serving as a key measure of corporate credit risk and market liquidity. Economists use this spread to assess financial market stress, credit availability, and potential economic challenges.
Methodology
The data is calculated by subtracting the federal funds rate from the average yield of Moody's Seasoned Baa-rated corporate bonds, typically sourced from financial market data and Federal Reserve reporting.
Historical Context
Policymakers and investors use this spread as a critical indicator of economic health, credit market conditions, and potential recessionary signals.
Key Facts
- Wider spreads typically indicate higher perceived economic risk
- Reflects the premium investors demand for corporate debt above the risk-free rate
- Serves as a leading indicator of potential economic downturns
FAQs
Q: What does a widening BAAFF spread indicate?
A: A widening spread suggests increased perceived risk in corporate lending and potential economic uncertainty. Investors are demanding higher returns to compensate for perceived higher risk.
Q: How do changes in this spread impact investment decisions?
A: Investors use this spread to assess corporate bond attractiveness and potential economic challenges. A larger spread might signal more caution in corporate bond investments.
Q: How is the Baa corporate bond rate determined?
A: Moody's determines the Baa corporate bond rate based on medium-grade corporate bonds with moderate credit risk, assessed through comprehensive financial analysis.
Q: What makes this indicator important for economic analysis?
A: The spread provides insights into credit market conditions, corporate financial health, and potential economic stress before traditional economic indicators show changes.
Q: How frequently is this data updated?
A: The BAAFF data is typically updated monthly, providing a consistent view of corporate bond yields and federal funds rate interactions.
Related Trends
30-year Breakeven Inflation Rate
T30YIEM
10-Year Treasury Constant Maturity Minus Federal Funds Rate
T10YFF
Moody's Seasoned Baa Corporate Bond Yield Relative to Yield on 10-Year Treasury Constant Maturity
BAA10Y
6-Month Treasury Constant Maturity Minus Federal Funds Rate
T6MFF
3-Month Commercial Paper Minus Federal Funds Rate
CPFF
5-Year Treasury Constant Maturity Minus Federal Funds Rate
T5YFF
Citation
U.S. Federal Reserve, Moody's Seasoned Baa Corporate Bond Minus Federal Funds Rate [BAAFF], retrieved from FRED.
Last Checked: 8/1/2025