HY-IG OAS Spread Significant Negative Correlation

HY= high yield option adjusted spread
IG= investment grade option adjusted spread

HY-IG Option Adjusted Spread showing significant inverse/negative correlation to the S&P500.

When the HY-IG spread (white) rises we see the S&P500 (yellow) fall. The inverse is also true. Spread is currently trending down and SPX is rising which could be indicative of a short term shift towards a ‘risk on’ sentiment.

Were the HY-IG spread’s trend to shift directions from down to up, we could infer that SPX would shortly after begin to trend in the opposite direction based on recent behavior. (not financial advice)