BAA Corporate Yield vs 10Y Treasury
The Moody's BAA-10Y Treasury spread (FRED:BAA10Y) closed at 1.72 percent (172 bps) for April 2026, near the 30th percentile of its 1986-2026 history. That sits below the 287 bp threshold breached only during defined credit events: 1989-1991, 2002, the 2008-2009 financial crisis (December 2008 peak 594 bps), March 2020 COVID stress (peak 418 bps), and brief 2022 windows.
Also known as: Baa-10Y Treasury Spread (Baa spread) · 10Y Treasury Yield (10Y yield, 10 year treasury, TNX)
Why This Comparison Matters
The Moody's BAA-10Y Treasury spread (FRED:BAA10Y) closed at 1.72 percent (172 bps) for April 2026, near the 30th percentile of its 1986-2026 history. That sits below the 287 bp threshold breached only during defined credit events: 1989-1991, 2002, the 2008-2009 financial crisis (December 2008 peak 594 bps), March 2020 COVID stress (peak 418 bps), and brief 2022 windows.
Why the BAA-10Y spread is the longest credit-risk indicator desks track
The BAA series is one of the few corporate-credit datasets that runs continuously from 1919 (with structural revisions in 1953 and 1986). FRED's BAA10Y series, which is the daily spread used by most desks, runs from January 2, 1986 onward. The 30-year average of the daily series is 217 basis points, the median is 187 basis points, and the spread has been below 200 bps in roughly 55 percent of all trading days since 1986. The BAA leg is the lowest investment-grade Moody's rating, so the spread captures the additional yield investors demand to lend to the marginal investment-grade corporate borrower over the global risk-free benchmark. Bridgewater's Daily Observations and PIMCO's Secular Forum both cite BAA10Y as a primary cyclical credit indicator, and the Federal Reserve Bank of St. Louis has used the series in financial-stress composites since the 1990s. The April 2026 reading of 172 bps places the spread in the 30th percentile, in the bottom third of the historical distribution, indicating compressed credit risk pricing rather than elevated stress. The 75th-percentile threshold is approximately 287 bps, which has only been breached during defined credit events: 1989-1991, 2002, 2008-2009, March 2020, and brief windows in 2022. The 90th percentile (369 bps) has only been sustained during the 2008-2009 financial crisis, and the 99th percentile (472 bps) has been breached only in the worst weeks of late 2008. The percentile structure is therefore highly skewed: the upper tail is rare and concentrated in defined credit events, while the lower-half range is the typical operating environment for the bulk of the post-1986 sample.
Three peaks that frame the upper distribution
The December 2008 peak at 594 basis points (BAA10Y) is the modern series high, with the three-month average cresting at 567 bps, levels not seen since 1935. The COVID stress drove BAA10Y to 418 basis points in March 2020, with the peak occurring on March 23, 2020 (the same day the Federal Reserve
Conditional Forward Response (Tail Events)
How 10Y Treasury Yield has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Baa-10Y Treasury Spread. Computed from 1,233 aligned daily observations ending .
Following these triggers, 10Y Treasury Yield rises 0.27% on average over the next 5 sessions, versus an unconditional baseline of +0.58%. 126 qualifying events; 10Y Treasury Yield closed positive in 55% of them.
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Frequently Asked Questions
What is a normal BAA-10Y spread?+
The 30-year average of the daily BAA-10Y series is 217 basis points and the median is 187 basis points. The 25th percentile is 168 bps and the 75th percentile is 287 bps. Roughly 55 percent of all trading days since 1986 have been below 200 bps, which is the rough cutoff for the lower half of the distribution. The April 2026 reading of 172 bps is barely above the 25th percentile, consistent with the late-cycle compression that has held since mid-2024. Spreads above the 75th percentile (287 bps) have only been sustained during defined credit events: 1989-1991, 2002, 2008-2009, March 2020 and brief windows in 2022.
What was the BAA-10Y peak during 2008?+
BAA-10Y peaked at 594 basis points in December 2008, with the three-month average cresting at 567 bps, levels not seen since 1935. The widening was driven by both the BAA leg (which spiked above 9 percent on default-risk repricing) and the 10-year leg (which fell below 3 percent on flight-to-quality buying). The spread compressed sharply in 2009 as the Fed's first round of asset purchases and the TARP Capital Purchase Program absorbed credit risk, but BAA-10Y did not return to its pre-crisis 150-200 bp range until late 2010. The December 2008 peak remains the modern series high.
How quickly does the BAA-10Y spread react to Fed policy?+
The 10-year leg moves within minutes of FOMC announcements via Treasury futures. The BAA leg moves over hours to days as primary issuance, secondary trading and credit-derivative markets digest the new path. The cleanest example was March 23, 2020: the Fed announced the Primary and Secondary Market Corporate Credit Facilities at 8:00 am ET, the BAA-10Y spread had peaked the previous trading day at 418 bps, and the spread had compressed by approximately 100 bps within five trading days. The mismatch in reaction time between the two legs is itself a feature of the spread: it produces transient policy-driven moves that should be distinguished from organic credit moves.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.