Investment Rating - The report does not explicitly provide an investment rating for the industry but discusses various credit spreads and return forecasts for different segments, indicating a cautious outlook on high-yield (HY) and leveraged loans while favoring investment-grade (IG) credit [5][61][72]. Core Insights - The report emphasizes a yield-driven market for global investment-grade credit, with expectations for spreads to remain stable or widen modestly in high-yield and leveraged loan segments due to slower global growth and sticky inflation [5][61][72]. - It highlights the divergence in economic forecasts, with the US and Euro Area experiencing low growth and inflation pressures, while Asia is expected to face wider spreads due to trade risks and high valuations [9][10][81]. - The report suggests a preference for quality over cyclicality in credit investments, indicating that investors may be better compensated for taking duration risk rather than cyclical risk in the current environment [30][32][39]. Summary by Sections Global Credit Outlook - Global investment-grade credit remains attractive due to good yields, with a preference for 5-10 year maturities in the US and 15 years or more in Europe [5][61]. - High-yield spreads are expected to widen modestly, reflecting slower growth and increasing default rates, with a forecast of 3.5% for high-yield defaults [61][72]. Macro Economic Forecasts - The report forecasts US GDP growth at 1.0% for 2025, with core inflation at 3.3%, and no Federal Reserve rate cuts expected this year [10][11]. - Euro Area growth is projected at 0.8% with core inflation at 2.2%, while China is expected to grow at 4.0% with minimal inflation [10]. Sector-Specific Insights - In the US, investment-grade credit is expected to see excess returns of 2.1%, while high-yield is forecasted at 3.6% [61]. - European investment-grade credit is projected to have a total return of 2.0% in the base case, with high-yield expected to yield 4.9% [72]. Asia Credit Outlook - Asia's investment-grade spreads are anticipated to widen to 100 basis points, reflecting concerns over weaker growth and tariff uncertainties [81][83]. - The report indicates a preference for non-China investment-grade credit due to expected tariff impacts on China [84][85].

Investment Rating - The report does not explicitly provide an investment rating for the global credit market Core Insights - US Investment Grade (IG) spreads tightened by 3 basis points (bp) last week, resulting in an excess return of 32 bp, with inflows of $1.9 billion for the week and a year-to-date (YTD) total of $12.6 billion [2] - US High Yield (HY) spreads tightened by 16 bp, leading to an excess return of 39 bp, with inflows of $0.2 billion for the week and a YTD total of $2.7 billion [3] - US Leveraged Loans saw spreads tighten by 2 bp, yielding a total return of 22 bp, with inflows of $0.3 billion for the week and a YTD total of $2.5 billion [4] - EU Investment Grade spreads tightened by 4 bp, resulting in an excess return of 23 bp, with net inflows of €2.1 billion for the week and €19.1 billion YTD [5] - EU High Yield spreads tightened by 17 bp, translating into an excess return of 50 bp, with net inflows of €606 million for the week and €0.6 billion YTD [6] - Asia Credit spreads tightened by 2 bp, with IG spreads tightening by 3 bp and HY spreads widening by 6 bp [7] Summary by Sections Global Credit Snapshot - US IG current spread is 88 bp, with a 1-year change of 32% and a 12-month change of 2 bp [12] - EU IG current spread is 100 bp, with a 1-year change of 34% and a 12-month change of -8 bp [12] - Asia IG current spread is 78 bp, with a 1-year change of 27% and a 12-month change of 0 bp [12] Performance Across Asset Classes - US IG funds saw inflows of $1.9 billion, with YTD issuance reaching $866 billion, a 7.4% increase year-over-year [2] - US HY funds experienced inflows of $0.2 billion, with YTD supply tracking at $106 billion, a 26% decrease year-over-year [3] - EU IG funds had net inflows of €2.1 billion, with YTD volumes at €356 billion, a 7% increase year-over-year [5] - EU HY funds saw net inflows of €606 million, with YTD supply at €56 billion, a 13% decrease year-over-year [6] Credit Demand and Supply - Weekly supply for US IG reached $24 billion, raising YTD issuance to $866 billion [2] - Weekly supply for US HY was $5 billion, with YTD supply at $106 billion [3] - Weekly supply for EU IG was €12 billion, lifting YTD volumes to €356 billion [5] - Weekly supply for EU HY was €1 billion, with YTD supply tracking at €56 billion [6] Sector Performance - In US IG, media, telecoms, and retail sectors delivered the best performance, while basic industry, automotive, and services lagged [2] - In US HY, transportation, technology, and real estate sectors delivered the highest excess returns, while banking, telecoms, and insurance lagged [3] - In EU IG, leisure, automotive, and insurance sectors outperformed, while services, utility, and transportation lagged [5] - In EU HY, single B rated bonds outperformed [6]

Investment Rating - The report does not explicitly provide an investment rating for the industry but indicates a cautious outlook due to abnormal market conditions and economic forecasts [2][10][16]. Core Insights - The report discusses a "pause" in tariff increases, which has led to significant market movements, but overall tariffs remain historically high, impacting growth forecasts for the US and euro area [3][13][14]. - Economic growth forecasts for the US and euro area are projected at 0.6% for 2025, which is considered low and may lead to above-average risk premiums for investors [3][14]. - The Federal Reserve is not expected to cut rates in 2025, contrary to market expectations, while the European Central Bank and Bank of England are anticipated to implement rate cuts [4][19][21]. Summary by Sections Global Credit Overview - Recent market movements are characterized as abnormal and more typical of bear markets, indicating a wider range of potential outcomes [9][10]. - Heavy outflows from credit markets have been noted, with significant amounts withdrawn from investment-grade (IG) and high-yield (HY) funds [33]. Economic Forecasts - The report highlights that tariffs are expected to contribute to core PCE inflation exceeding 3.5% in the second half of 2025, complicating the Fed's ability to cut rates [4][21]. - The report emphasizes that the market may be overly optimistic regarding the timing of Fed rate cuts, with expectations of approximately 75 basis points of cuts in 2025 not aligning with the economists' views [17][18]. Sector-Specific Insights - In the retail sector, companies are being sensitized to the impact of tariffs, with potential EBITDA reductions and increased leverage expected due to the cumulative tariff rate reaching 104% [45][46][47]. - The Asia credit strategy suggests that credit spreads in the region should widen due to concerns over tariffs and valuations, advising investors to focus on defensive trades [39][41]. Tactical Considerations - Key sentiment indicators remain in a state of fear, which may provide a buffer against further market declines [22][24]. - Upcoming data releases, including retail sales and ECB rate decisions, are expected to influence market dynamics significantly [23].