Culminating Project Title
Date of Award
Culminating Project Type
Applied Economics: M.S.
School of Public Affairs
Zhengyang ‘Robin’ Chen
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Bonds spread has been recognized as a strong indicator of future economic growth. Forecasting economic growth with spread is simpler compared to other measures. This paper focuses to study the usefulness of the spread between Treasury Bonds and High-Quality Corporate Bonds in predicting US economic growth, its accuracy between the years 1999 and 2021, and comparison with the traditional yield curve. By analyzing the relationship between different spreads and Industrial production index frequently used for observing and analyzing current economic performance, the results indicate that the traditional spreads such as 10Year–3Month and 10Year–2Year are not very accurate predictors of economic activity, while the new spread between Treasury Bonds and High-Quality Corporate Bonds can predict the economy.
Keywords: Spread, Industrial Production, Economic Growth, Yield Curve.
Faqeerzai, Mohibullah, "Treasury Bond and Corporate Bond Spread as an Indicator of Economic Activity" (2023). Culminating Projects in Economics. 23.