BBB minus IG Spread

ICE BofA BBB OAS minus ICE BofA Investment Grade OAS — the marginal spread premium for the lowest investment-grade tier vs the IG index as a whole. BBB is the largest segment of the IG universe by issuance; when this differential widens, the market is pricing in a wave of fallen angels (BBB downgrades to junk). Fund managers who can only hold IG-rated paper are forced sellers on a downgrade, creating cliff-edge selling dynamics.

This indicator is computed by MacroLab from two FRED series: BAMLC0A4CBBB minus BAMLC0A0CM. Both input series are sourced from the Federal Reserve Economic Data (FRED) database.