Rates and credit

TYIELDS, Treasury yield curve

The TYIELDS panel plots the major points of the US Treasury yield curve, 2Y, 5Y, 10Y, 30Y, over time. The shape of the curve is the single most-watched signal in macro.

• Steep curve (long rates > short rates) = normal expansion regime, market expects future growth and inflation.
• Inverted curve (short > long, especially 2Y > 10Y) = recession signal. The bond market expects the Fed to cut. Historically 12-18 month leading indicator.
• Flattening = transitioning between regimes. The 2s10s slope is the standard read.

For crypto specifically, the level of the 10Y matters: rising yields tighten financial conditions and tend to weigh on high-duration risk assets (which crypto is); falling yields loosen conditions. Direction often matters more than absolute level.

CREDIT, IG and HY spreads

The CREDIT panel plots two corporate-credit spreads (option-adjusted, OAS) over time:

• IG (investment grade), high-quality corporate bonds vs Treasuries. Typical range 80-150 bps.
• HY (high yield / junk), below-investment-grade corporate bonds. Typical range 300-500 bps. The risk-appetite read.

HY is the more actionable for crypto. When HY spreads widen (credit getting more risk-averse), risk assets follow within weeks. When HY spreads tighten (credit getting comfortable), risk-on tape persists. The relationship leads equities and crypto by 1-4 weeks.

Reading levels:

• HY OAS < 350 bps = relaxed credit. Bull tape backdrop.
• HY OAS 350-500 bps = normal range.
• HY OAS > 500 bps = stressed. Crypto longs face headwinds even with constructive native flow.
• HY OAS > 700 bps = crisis territory. Historically aligns with broad risk-asset capitulation.