A leading indicator is the spread between yields on speculative “junk” bonds and American Treasury bonds.

Opps, this article was in 1987, Note parallels with 2008

THE COMING DEFAULTS IN JUNK BONDS A FORTUNE study (1987) finds that many of these high-yield, low-quality securities face big trouble. The victims could range from huge institutions to countless small investors.

By Ford S. Worthy REPORTER ASSOCIATES Lorraine Carson, Christopher Knowlton, Terence Pare, Andrew Evan Serwer
March 16, 1987
(FORTUNE Magazine) – LEVINE. Boesky. Siegel. Wall Street's gallery of rogues keeps growing, with every indication of more to come. But while the financial community waits nervously for the next insider trading scandal to break, another kind of shocker is brewing. Not as dramatic, perhaps -- no one is likely to be led off in handcuffs -- but with effects that ultimately could prove more far- reaching. The threat: an unprecedented level of defaults by the companies issuing junk bonds. The fallout might rain down even on people who have never heard of these risky high-yield securities. Hundreds of institutions that have loaded up on the bonds could lose money, ranging from insurance companies to savings and loans. So could thousands of small-time investors who have bought shares in junk bond mutual funds. Undermine investors' confidence in junk bonds and you strike at the heart of Drexel Burnham Lambert, whose senior executive vice president, Michael Milken, pioneered their use ..."

TODAY 2008, Corporate Bankruptcies in America; Waiting for Armageddon

Mar 27th 2008 The Economist. The recent rise in corporate bankruptcies in America may well be a sign of much worse to come...If the debt markets are to be believed, companies could be in at least as much trouble as they were in the previous two downturns, in the early 1990s and at the start of this decade, after the dotcom bubble burst. A leading indicator is the spread between yields on speculative “junk” bonds and American Treasury bonds. A year ago, the spread was only about 280 basis points; the long-term average is around 500 points. This month the spread exceeded 800 points for the first time since March 2003, reaching 862 on March 17th...."