Escalating trade tensions have helped push the U.S. Treasury yield curve to its flattest in more than a decade. This flattening is watched closely by investors as an indicator of economic trouble ahead. But another curve deserves attention too—and it is getting steeper.
That is the corporate-bond spread curve, which measures how much extra compensation investors are demanding to take credit risk at different time horizons. The U.S. curve has steepened, as spreads versus Treasurys have widened more on long-maturity bonds than...