The ICE BofA High Yield OAS (option-adjusted spread) above 500 basis points signals meaningful credit stress. The long-term median is approximately 400bp. Spikes above 500bp have preceded or coincided with economic slowdowns.
ALAN INTELLIGENCE
ALAN INTELLIGENCE · alanglobalintelligence.com
ALAN IntelligenceData as of 2026-11-09
Every historical instance, overlaid — S&P 500 forward path from the event
Each instance (n=8)Median path25th-75th percentileCurrent: 2020
Median forward returns by horizon
Bars: median S&P 500 forward return. Whiskers: 25th-75th percentile. n = 8 occurrences.
Based on 8 historical occurrences. Last triggered: 2020-03-09.
Past performance is not indicative of future results. This material is for informational and educational purposes only and does not constitute investment advice, an offer to buy or sell any security, or a recommendation. Data from publicly available sources believed to be reliable but not guaranteed. All investments involve risk, including possible loss of principal.
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ALAN GLOBAL INTELLIGENCE · alanglobalintelligence.comSource: FRED BAMLH0A0HYM2 · Computed 2026-11-11
Historical occurrencesshowing 8 of 8
Date
1M return
1Y return
5Y return
1998-10-01
+11.4%
+30.1%
+5.4%
2000-05-24
+3.0%
-7.6%
-14.1%
2003-07-11
-1.8%
+11.7%
+23.1%
2008-01-02
-3.6%
-37.6%
+0.8%
2010-01-12
-5.1%
+12.2%
+77.0%
2011-08-04
-2.2%
+15.9%
+81.7%
2015-08-24
+2.4%
+15.5%
+81.9%
2020-03-09
-3.2%
+41.1%
+101.0%
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
Credit spreads are an early-warning system
High-yield spreads tend to widen before equities sell off. The bond market is often months ahead of the stock market in pricing recession risk.
Above 500bp, high-yield bonds become attractive
At 500bp+ spreads, HY bonds are pricing in a default rate of ~6-7%. The actual historical average default rate is ~3-4%. Spreads above 500bp have historically produced strong forward returns.
Watch for the spread to narrow as a green light
When HY spreads peak and begin narrowing, it typically signals that credit conditions are improving. Equities tend to rally alongside spread compression.
For your portfolio
Widening spreads are the bond market's early warning, so treat a move through 500bp as a prompt to audit what your 'safe' sleeve actually holds — credit-heavy bond positions will behave more like equities in a downturn. For investors who deliberately own high-yield, spreads at this level have historically overpaid for the defaults that followed, which argues for rebalancing into the sleeve rather than abandoning it.
For information and research only. Not investment advice. ALAN does not place trades or execute orders. Figures come from the sources shown and can lag the market; verify independently before making decisions. Past performance is not predictive of future results.
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