Economics -- Credit spreads and yield curve

CFA Level III Economics
#1

In part 2 of capital expecatations, we given exhibit 2. It says a steep yield curve predicts increase in credit premium. Makes no sense to me.
Above exhibit 2 it says, a steep treasury curve corresponds to the trough of business cycle when defaults rates begin to decline.
If default rates begin to decline, doesn’t that mean credit premiums are about to decrease? Not high credit premiums.

Thanks

#2

It’s focused on the future (LT), the economy will eventually overheat, fed steps in to raise rates, pressure on profits, credit risk up