The junk-bond market is showing cracks as investors demand higher yields for riskier debt. Current high-yield rates have risen to 8.1%, up from 7.22% a month ago. Credit spreads across the market have widened to about 315 basis points, while the lowest-rated CCC-and-below segment sees spreads near 1,250 basis points.

Michael Arone, chief investment strategist at State Street Investment Management, said the market is flashing yellow—a warning signal—yet remains far from a crisis.

Kelley Gerrity of Morgan Stanley Investment Management noted that credit quality overall sits at a record high, with BB bonds making up more than 60% of the market compared with about 38% before the global financial crisis.

Collin Martin of the Schwab Center for Financial Research said the widening has been orderly and that it is too early to conclude stress is spreading through the broader credit market.

Investors are watching for a steeper widening in the broader high-yield sector, particularly in the BB tranche, where spreads sit around 194 basis points, up from 179 basis points a year earlier.

R.J. Gallo, chief investment officer for global fixed income at Federated Hermes, said high yield tends to come under pressure when the economy moves toward a sharp downturn, though he does not view a recession as the most likely outcome at this time.