what is a yield spread 
the difference in yields on two debt instruments that have different maturity dates issuers credit ratings or risk levels is known as the yield spread yield spreads are commonly reported in percentage or basis points in order to determine the yield spread you must subtract one investment s yield from that of the other can yield spreads forecast future economic performance yield curves are valuable tools that can shed light on the economy which means they can be used to help forecast whether a recession or a recovery is on the horizon as such they are often considered leading economic indicators when spreads widen it leads to a positive yield curve this means that the economy is expected to grow in the future but when the yield curve flattens it generally indicates that short term rates are falling the expectation here is that the economy won t be doing very well in the future 