“… a tightening credit spread implies less risk”. Hold that thought.
There are two forces at play in the movement of curves you describe:
1) a perception of a more benign risk environment that results in investors accepting a lower premium to hold risky assets;
2) one consequence of point 1) is that Fixed Income investors switch away from ‘risk-free’ Government bonds into ‘risky’ Corporate bonds to benefit from the higher yield paid by the latter (higher yield that has now become more attractive due to the abating risk).
Cause-effect is therefore not to be found in the principle ‘less risk – downward movement of the yield curve’ but rather in the supply/demand mechanism at point 2) that generally results in the Govt. bond yeld to rise (everybody is selling) while, at the same time, the credit curve comes down (everybody is buying).
Good luck, Carlo