Interest-rate spreads often signal market developments well in advance of other economic or information sources. For example, a shift in the spread between the 10-year T-note yield and the fed funds target rate, for example, can predict slowing or accelerating economic growth three or more quarters ahead of the event.

A less-noticed interest-rate spread can signal an impending credit crisis, although in this case the warning is likely to come only three or four months in advance — perhaps not soon enough for economic forecasters, but plenty early for traders.