--- title: "This signal from the corporate bond market has historically preceded big drawdowns for the S&P 500" type: "News" locale: "en" url: "https://longbridge.com/en/news/304097534.md" description: "The widening yield gap between Triple-C and Single-B rated corporate bonds has exceeded 8%, a signal historically preceding significant S&P 500 drawdowns. Goldman Sachs analyst Bobby Molavi notes this pattern, citing past instances in 1999, 2000, 2008, 2015, and 2020 where the index suffered substantial declines following similar spreads. The current gap stands over 9%, raising concerns about potential market volatility." datetime: "2026-11-03T10:31:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/304097534.md) - [en](https://longbridge.com/en/news/304097534.md) - [zh-HK](https://longbridge.com/zh-HK/news/304097534.md) generator: "portal-rs" --- # This signal from the corporate bond market has historically preceded big drawdowns for the S&P 500 By Steve Goldstein It can get messy on Wall Street when corporate bond yields climb. The corporate bond market has been flashing a signal that historically precedes bad news for the stock market. It's the gap between the yield on Triple-C and Single-B rated debt. Both are known as junk bonds, but the single-B means a company is vulnerable while Triple-C means it's at substantial risk of default. Bobby Molavi, head of European execution services at Goldman Sachs, flagged in a note to clients the disappointing stock-market results that have ensued when the difference in yield between the two classes of corporate debt reaches 8%. That gap first reached 8% on Sept. 24 and now stands at over 9%. The gap between the yields on CCC and B corporate debt MarketWatch, using FactSet data, found at least five previous times that the gap reached 8% - in 1999, 2000, 2008, 2015 and 2020. In 2008, the S&P 500 had already tumbled by 43%, during the global financial crisis. It ended up in a drawdown of 53%, so the declines after the yield gap between those two grades of junk bonds reached 8% were not that much worse. The 2020 episode, similarly a few weeks after COVID-19 was discovered in the West, had already resulted in a 24% drawdown for the S&P 500, that at its worst was a 27% drawdown. The 1999 episode seemed to hit with a lag. On March 31, 1999, the S&P 500 had already fallen 2% from its peak. It then climbed for three months before falling 12% by mid-October. The 2000 and 2015 episodes may be more illustrative. On Jan. 3, 2000, the S&P 500 was down just 1% from its highs, and it ended up sliding 17%. On Nov. 30, 2015, the S&P 500 was a little over 2% away from its high, and it fell as much as 14%. Now, the S&P 500 SPX sits about 3.5% from its highs. -Steve Goldstein This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. ### Related Stocks - [IVV.US](https://longbridge.com/en/quote/IVV.US.md) - [SDS.US](https://longbridge.com/en/quote/SDS.US.md) - [SH.US](https://longbridge.com/en/quote/SH.US.md) - [SPDN.US](https://longbridge.com/en/quote/SPDN.US.md) - [SPLG.US](https://longbridge.com/en/quote/SPLG.US.md) - [SPUU.US](https://longbridge.com/en/quote/SPUU.US.md) - [SPXL.US](https://longbridge.com/en/quote/SPXL.US.md) - [SPXS.US](https://longbridge.com/en/quote/SPXS.US.md) - [SPXU.US](https://longbridge.com/en/quote/SPXU.US.md) - [SPY.US](https://longbridge.com/en/quote/SPY.US.md) - [SSO.US](https://longbridge.com/en/quote/SSO.US.md) - [UPRO.US](https://longbridge.com/en/quote/UPRO.US.md) - [VOO.US](https://longbridge.com/en/quote/VOO.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [GS.US](https://longbridge.com/en/quote/GS.US.md) ## Related News & Research - [Kiwoom Securities offers KRW 26.61 billion in equity-linked bonds](https://longbridge.com/en/news/303479075.md) - [LIVE MARKETS-Japan's vanishing T-bill stash could be about to make a comeback](https://longbridge.com/en/news/303607137.md) - [SPY Vs. IWM: Why 3.4% GDP Growth Leaves Two Different Tests For Investors](https://longbridge.com/en/news/304098350.md) - [Okta Set to Join S&P 500; Others to Join S&P MidCap 400 and S&P SmallCap 600 | KMB Stock News](https://longbridge.com/en/news/303807631.md) - [The S&P 500 stays on the back foot amid geopolitical uncertainty as US midterm elections loom. What's next?](https://longbridge.com/en/news/304104029.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**