thus, you interpret yield spreads between US Treasuries and riskier bonds as: ๐ increasing/high yield spread = risk-off ๐ lowering/low yield spread = risk-on
a lower yield spread means that the market requires less return per unit of risk lower yield spreads means that US Treasuries have a small premium over riskier bonds, thus the market is attributing a smaller premium to safe assets - a "risk-on" signal