Excess Bond Premium

The Excess Bond Premium is the GZ credit spread with the expected-default component stripped out — what's left is the price of bearing corporate credit risk beyond any fundamental deterioration, which is to say investor risk appetite itself. When it's negative, lenders are accepting thin compensation and credit is easy; when it turns sharply positive, the bond market is demanding a premium that firm fundamentals alone don't justify, and that shift has historically led recessions by around a year. Read it alongside the GZ Credit Spread card: the raw spread tells you what credit costs, this tells you how much of that cost is fear rather than arithmetic. The two come from the same monthly Federal Reserve release and move together most of the time, so the interesting moments are when they diverge. Note also that this is a staff research estimate rather than an official statistical series, which means it can be revised or have its methodology changed without notice — the direction and level are what matter here, not the last basis point.