High-Yield Spread

High-Yield Spread is the difference in interest rates between high-yield bonds (riskier corporate debt) and safer government bonds. Think of it as the extra payment investors demand for taking on more risk. You'll hear about it when markets get nervous—spreads widen when investors worry about defaults, and tighten when confidence returns. It's a useful barometer of overall market health and investor appetite for risk. For example, if a government bond pays 4% and a risky corporate bond pays 7%, the spread is 3%. A widening spread signals economic concern; a narrowing spread suggests optimism. Retail investors watch this metric to gauge whether it's a good time to buy riskier assets or play it safe.