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corporate bond market: Bank of America Caption outside of wrapper for normal article images Bank of America BAC, +1.44% analysts called this phenomenon a striking decoupling, in a report released Monday, adding that the last time it happened, in mid-August 2015, what followed was a correction in the form of a stock-market selloff, according to Market Watch. Credit spreads are a gauge of the market-implied default risk in the corporate bond market. A gauge of equity-market volatility, known as the VIX, and corporate-credit spreads — two market gauges that traditionally move in tandem — have recently diverged, as the following chart shows. Narrowing spreads reflect the market confidence that defaults are becoming less common or less probable, an indication of an improvement in the market perception of credit quality. Though the two gauges refer to different markets, they have historically moved in tandem and they are both inversely correlated with the S&P 500 SPX, +0.78% The VIX historically spikes at times of market stress, such as the dismal beginning to this year, and moves lower when equities post strong performance, such as during the recent rally that brought the S&P and the Dow industrials DJIA, +0.66% near record highs from their mid-February lows. On the other hand, the Chicago Board Options Exchange Volatility Index VIX, +6.68% also known as Wall Street fear gauge, is a measure of expected equity-market volatility over the next 30 days and is calculated using the implied volatility of S&P 500 index options. (news.financializer.com). As reported in the news.