The Credit Spread
The credit spread represents the difference in yields between high-risk junk-rated bonds and low-risk U.S. government bonds. When credit markets are liquid the spread narrows, when credit markets are tight the spread widens. The credit spread is a key indicator of the integrity of credit markets. CP tracks the credit spread monthly using data published in the Wall Street Journal. As of Dec. 14, 2012, the credit spread stands at 3.420%.