Scenario × Asset Analysis

What Happens to IG Effective Yield When the Sahm Rule Exceeds 1.0?

The Sahm Rule triggers recession alerts when unemployment rises 0.5 points. What happens when it exceeds 1.0, signaling a deepening downturn?

IG Effective Yield

5.03%

as of Apr 13, 2026

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Trigger: Sahm Rule Recession Indicator

0.20%

Condition: exceeds 1.0

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How IG Effective Yield Responds

When the Sahm Rule Exceeds 1.0, IG Effective Yield typically sees spreads widen as credit risk reprices. IG corporate bond effective yield, cost of investment-grade corporate borrowing. This scenario is particularly relevant for credit & financial stress because changes in Sahm Rule Recession Indicator directly influence the macro environment for IG Effective Yield. Investors should monitor both the trigger condition and IG Effective Yield's response to position accordingly.

Scenario Background

The Sahm Rule identifies recessions in real time: when the three-month moving average of unemployment rises 0.5 percentage points or more from its 12-month low, the economy is already in recession. A Sahm value exceeding 1.0 indicates a severe acceleration in unemployment, historically signaling not just recession onset but a deepening downturn.

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Historical Context

The Sahm Rule has accurately identified every recession since 1970 with no false positives at the 0.5 threshold. Values exceeding 1.0 occurred in every recession from 1970 onward: 1974 (2.0 peak), 1980 (2.0), 1981-1982 (2.5), 1990 (1.8), 2001 (1.3), 2008-2009 (4.5), and 2020 (11.0 peak during COVID). The 1981-1982 recession showed Sahm reach 1.0 in July 1981 with unemployment at 7.2%, peaking at 10.8% in November 1982. The 2008 Sahm crossed 1.0 in October 2008 with unemployment at 6.5%; unemploy...