A yield spread is the difference between yields on differing debt instruments of varying maturities, credit ratings, issuers, or risk levels. A yield spread is calculated by deducting the yield of one instrument from the other. This difference is most often expressed in basis points (bps) or percentage points.

When yield spreads expand or contract, it can signal changes in the underlying economy or financial markets.

Yield spreads can come in varying types, including zero-volatility spreads, high-yield bond spreads, and option-adjusted spreads.