QUICK DEFINITION
Yield Spread is the difference between two yields, usually measured in basis points.
WHY IT MATTERS
Why Yield Spread matters in bond markets
Yield spreads are used to compare relative value, credit risk, curve shape and cross-country market conditions.
MARKET CONTEXT
How to think about it
Bond investors use yield spread as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Yield Spread important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Yield spreads are used to compare relative value, credit risk, curve shape and cross-country market conditions.