U.S. gauges are showing their highest levels of credit risk so far this year, as investors exhibit fresh concern about the state of the country’s economy in light of tariffs and cuts to the federal workforce.
As numerous investment grade borrowers opted against issuing bonds today, the Markit CDX North American Investment Grade Index widened as much as 4.11 basis points (bps)—the most since September 20—to 55.59. The gauge rises as credit risk climbs. The Markit CDX North American High Yield Index, which falls as credit risk increases, declined as much as 84 bps to 106.06—its lowest in six months. Both indexes hit their worst levels of the day in mid-afternoon trading.
The broad market tumult prompted about 10 potential borrowers to change their plans away from entering the U.S. investment grade primary market on Monday.
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Equities opened the week with declines around the world amid worries about the U.S. economic outlook. The Nasdaq 100 Index plunged almost 4 percent, the most since 2022, after briefly falling into correction territory on Friday.
If a U.S. recession does materialize in 2025, which Barclays Plc sees as “improbable but no longer unthinkable,” it will be led by consumer weakness, strategists led by Bradley Rogoff and Dominique Toublan wrote in a note Friday. “We increasingly view a large-scale pullback in spending driven by uncertainty about tariffs, DOGE layoffs, and weakness in equities as a non-trivial tail risk.”
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