President Donald Trump during a tariff announcement in the Rose Garden of the White House on April 2. Photographer: Kent Nishimura/Bloomberg.

UBS Group AG strategists expect the impact of U.S. President Donald Trump’s tariffs to push corporate-bond spreads to levels last seen during the early part of the pandemic.

Concerns that tariffs will significantly slow down the global economy shook credit markets last week, with gauges that track credit-default swaps surging by the most since March 2023 in both the United States and Europe. Average high-grade spreads ended last week at 1.09 percentage points, or 109 basis points (bps), the highest level since August 2024, according to Bloomberg index data. Junk spreads ended Friday at 427 bps, the highest level since November 2023.

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