High-Yield Spread

High-Yield Spread is the difference in interest rates between high-yield bonds (riskier corporate debt) and safer U.S. Treasury bonds. Think of it as the extra return investors demand for taking on more risk. You'll hear about this spread when markets get nervous—it widens when investors worry about defaults, and narrows when confidence returns. It's a useful barometer of overall market health and investor appetite for risk. For example, if Treasury bonds pay 4% and risky corporate bonds pay 8%, the spread is 4 percentage points. A widening spread signals economic concern; a tightening spread suggests optimism.