Credit Spreads vs VIX
Credit spreads vs VIX — which is a better stress signal?
One-year comparison
Left axis: Credit Spreads (green) · Right axis: VIX (blue)
The analysis
Credit spreads measure default-risk pricing in the high-yield bond market; VIX measures implied volatility on S&P 500 options. Credit spreads move more persistently and reflect balance-sheet-level stress. VIX spikes around events but normalizes quickly. Historically, credit spreads above 500 bps are the sharper recession tell; VIX above 30 is a necessary but not sufficient condition.
Track high-yield credit spreads (ICE BofA HY OAS). Widening spreads signal rising default risk and are a classic recession leading indicator.
Track the CBOE VIX — Wall Street's fear gauge. Combined with the yield curve, VIX cycles outperform the yield curve alone for recession prediction.