ICE BofA US High Yield Index Option-Adjusted Spread
This dataset tracks ice bofa us high yield index option-adjusted spread over time.
Latest Value
2.98
Year-over-Year Change
1.71%
Date Range
12/31/1996 - 8/5/2025
Summary
The ICE BofA US High Yield Index Option-Adjusted Spread measures the additional yield investors demand for holding high-yield corporate bonds compared to U.S. Treasury securities. This metric serves as a critical indicator of credit market stress and investor sentiment toward riskier corporate debt.
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 spread represents the difference in yield between high-yield (or 'junk') bonds and risk-free Treasury bonds, adjusted for embedded options. Economists and investors use this metric to assess perceived credit risk, market liquidity, and overall economic health.
Methodology
The index is calculated by Bank of America Merrill Lynch, measuring the option-adjusted spread of the US high-yield bond market. It involves complex statistical modeling that accounts for potential bond call or prepayment features.
Historical Context
Financial analysts and policymakers use this spread to gauge market sentiment, predict potential economic downturns, and understand corporate credit conditions. A widening spread typically signals increased market uncertainty or perceived higher default risks.
Key Facts
- Represents the yield premium for high-risk corporate bonds
- Widely used by investors to assess market risk
- Fluctuates with economic conditions and market sentiment
- Higher spread indicates greater perceived credit risk
- Tracked by central banks and financial institutions
FAQs
Q: What does a high spread indicate?
A: A high spread suggests investors perceive greater risk in corporate bonds, potentially signaling economic uncertainty or increased default probability.
Q: How is this spread calculated?
A: It's calculated by comparing high-yield bond yields to Treasury yields, with statistical adjustments for embedded bond options.
Q: Why do investors care about this spread?
A: The spread provides insights into market sentiment, credit conditions, and potential economic challenges.
Q: What causes spread changes?
A: Economic conditions, corporate financial health, market liquidity, and investor risk perception can all impact the spread.
Q: Is a wider spread always negative?
A: Not necessarily. While a wider spread can indicate increased risk, it also presents potential opportunities for higher-yield investments.
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Citation
U.S. Federal Reserve, ICE BofA US High Yield Index Option-Adjusted Spread [BAMLH0A0HYM2], retrieved from FRED.
Last Checked: 7/31/2025