High-Yield Credit Spreads (OAS)
Track high-yield credit spreads (ICE BofA HY OAS). Widening spreads signal rising default risk and are a classic recession leading indicator.
Current Value
Trigger Level: >500 bps = credit stress
AI Analysis
As of February 22, 2026, the high-yield option-adjusted spread (HY OAS) is at 288 basis points, indicating tight credit spreads. This low level suggests that there is currently minimal credit stress in the market, which reduces the risk of a recession at this time.
What is the Credit Spreads?
The ICE BofA High Yield Option-Adjusted Spread (HY OAS) measures the yield premium investors demand for holding high-yield corporate bonds over risk-free Treasuries. It reflects credit risk and default expectations.
Why It Matters for Recession Risk
Widening credit spreads signal that bond investors are demanding more compensation for default risk — a sign of deteriorating economic conditions. Spreads above 500bps have historically coincided with recessions.
Historical Context
Spreads blew out to 1,100bps during the 2008 crisis and 1,087bps during the March 2020 COVID crash. Rapid widening from compressed levels is particularly significant as a recession warning.
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