Insight – Cincinnati Asset Management

14 Jul 2026

High Yield Quarterly, Insight CAM Team 0 comment

2026 Q2 High Yield Quarterly

Second Quarter Commentary & Outlook
July 2026
In the second quarter of 2026, the Bloomberg US Corporate High Yield Index (“Index”) return was 2.47% bringing the year to date (“YTD”) return to 1.96%. The S&P 500 index return was 15.20% (including dividends reinvested) bringing the YTD return to 10.19%. Over the period, while the 10 year Treasury yield increased 15 basis points, the Index option adjusted spread (“OAS”) tightened 47 basis points moving from 317 basis points to 270 basis points.

With regard to ratings segments of the High Yield Market, BB rated securities tightened 42 basis points, B rated securities tightened 68 basis points, and CCC rated securities widened 45 basis points. The chart below from Bloomberg displays the spread move of the Index over the past five years. For reference, the average level over that time period was 343 basis points.

The sector and industry returns in this paragraph are all Index return numbers. The Index is mapped in a manner where the “sector” is broader with the more specific “industry” beneath it. For example, Energy is a “sector” and the “industries” within the Energy sector include independent energy, integrated energy, midstream, oil field services, and refining. The Banking, Finance Companies, and Other Financials sectors were the best performers during the quarter, posting returns of 3.72%, 3.67%, and 3.44%, respectively. On the other hand, Communications, Energy, and Insurance were the worst performing sectors, posting returns of 1.60%, 1.63%, and 1.70%, respectively. At the industry level, office REITs, life insurance, and healthcare REITs all posted the best returns. The office REITs industry posted the highest return of 5.77%. The lowest performing industries during the quarter were railroads, cable, and retail REITs. The -6.72% posted by the railroads industry was the lowest return by any industry.

After the very strong issuance of 2025, Q1 posted a robust $92.7 billion in new issuance and Q2 was even stronger at $127.7 billion. Of the issuance that did take place during Q2, Communications took 26% of the market share followed by Discretionary at 16% share, and Financials at 15% share.
The Federal Reserve held the Target Rate steady at the April and June meetings. There was no meeting held in May. More interesting to note is that the new Fed Chair Kevin Warsh made his debut and the Fed changes that are afoot. Kevin Warsh’s first Fed meeting marked a regime shift: less guidance and a stripped-down statement. But the message was clearly hawkish from his committee and the markets.i Fed communications will be much reduced going forward as Warsh isn’t really a fan and is creating a task force to evaluate. The Fed dot plot was still released after the June meeting, but the Chairman chose not to provide his own projection dot. At the post-meeting press conference, he was quite clear that inflation is very much in the Committee’s cross-hairs stating, “Persistently high prices are a burden for the American people. This committee will deliver price stability.” For their part, market participants are now forecasting hikes instead of cuts in the Fed Target rate for 2026. At the end of March, investors were pricing in an implied rate cut of 7 basis points for 2026. Currently, the implied rate move being priced in is a hike of 34 basis points for 2026.ii More broadly, Warsh said another task force would examine the Fed’s reliance on economic data built from surveys, arguing that official statistics haven’t kept pace with the real-time information used in the private sector. The Fed will also review job frameworks, inflation frameworks, and the Fed balance sheet, creating a total of five separate task forces.
Intermediate Treasuries increased 15 basis points over the quarter, as the 10-year Treasury yield was at 4.32% on March 31st, and 4.47% at the end of the second quarter. The 5-year Treasury increased 29 basis points over the quarter, moving from 3.94% on March 31st, to 4.23% at the end of the second quarter. Intermediate term yields more often reflect GDP and expectations for future economic growth and inflation rather than actions taken by the FOMC to adjust the target rate. The revised first quarter GDP print was 2.1% (quarter over quarter annualized rate). Looking forward, the current consensus view of economists suggests a GDP for 2026 around 2.1% with inflation expectations around 3.5%.iii

Being a more conservative asset manager, Cincinnati Asset Management does not buy CCC and lower rated securities. Additionally, our interest rate agnostic philosophy keeps us generally positioned in the five to ten year maturity timeframe. During Q2, our higher quality positioning was a negative to performance as lower rated securities outperformed. Our natural cash overweight was also a drag on performance as the Index produced a solid return in Q2. An additional performance detractor included our credit selections within the consumer cyclicals sector. Benefiting our performance this quarter were our credit selections in the basic industry sector and selections within the utilities sector. Another benefit was added due to our overweight in the banking sector.

The Bloomberg US Corporate High Yield Index ended the second quarter with a yield of 7.16%. Treasury volatility, as measured by the Merrill Lynch Option Volatility Estimate (“MOVE” Index), had a spike to 115, a level well above the 80 index average of the past 10 years, as the conflict in Iran got in full swing toward the end of Q1. However, with much of the steam released from that pressure cooker, the current rate stands at a more reasonable level of 72. Data available through May shows 14 bond defaults so far in 2026 which is relative to 16 defaults in all of 2022, 41 defaults in all of 2023, 34 defaults in all of 2024, and 32 defaults in all of 2025. The trailing twelve month dollar-weighted bond default rate is 1.93%.iv The current default rate is relative to the 2.06%, 1.83%, 1.52%, 1.65% default rates from the previous four quarter end data points listed oldest to most recent. Defaults are generally stable and the fundamentals of high yield companies are in decent shape. From a technical view, fund flows are negative this year through May data at -$6.6 billion.v No doubt there are risks, but we are of the belief that for clients that have an investment horizon over a complete market cycle, high yield deserves to be considered as part of the portfolio allocation.

As the month of June got underway, oil prices were already coming down off highs in anticipation of a US and Iran conflict resolution. A Memorandum of Understanding was signed mid-June and oil prices continued to slide throughout the month as the MoU included reopening the Strait of Hormuz. Unfortunately, inflation remains stubbornly elevated as energy prices are only one of the contributing factors. This year has seen budding momentum in job growth, the economy has remained resilient, and the artificial intelligence buildout continues to see a flood of investment spending. The market narrative will likely remain in flux, as we wrap up the commentary for this quarter, a freshly released jobs report showed US hiring slowed sharply in June after downward revisions to the previous two months. There will certainly be plenty to evaluate as we move through the second half of 2026. Our exercise of discipline and credit selectivity is important as we continue to evaluate that the given compensation for the perceived level of risk remains appropriate. As always, we will continue our search for value and adjust positions as we uncover compelling situations. Finally, we are very grateful for the trust placed in our team to manage your capital.

i Bloomberg June 18, 2026: Warsh’s Fed Opens with Less Guidance
ii Bloomberg July 1, 2026: World Interest Rate Probability
iii Bloomberg July 1, 2026: Economic Forecasts (ECFC)
iv Moody’s June 16, 2026: May 2026 Default Report and data file
v Bloomberg July 1, 2026: Fund Flows

14 Jul 2026

Insight, Investment Grade Quarterly CAM Team 0 comment

2026 Q2 Investment Grade Quarterly

Second Quarter Commentary & Outlook
July 2026
Investment grade credit rebounded during the second quarter. Spread performance and coupon income more than offset a modest move higher in interest rates that occurred during the second period. YTD returns for investment grade credit moved into positive territory, erasing losses from the first quarter.

Second Quarter Recap
A sense of calm returned to the credit markets in the second quarter as spreads inched tighter, back toward their YTD tights. Risk assets rallied as investors became more comfortable with easing tensions between Iran and the U.S. The option adjusted spread (OAS) for the Bloomberg US Corporate Bond Index (The Index) opened the period at 89 and moved 15 basis points tighter in a relatively consistent manner to an OAS of 74 at quarter-end.

Treasuries experienced a mild sell-off throughout the period. By quarter-end, the 2yr, 5yr and 10yr Treasuries had moved 38, 29, and 15 basis points higher, respectively. The impact on the front end of the Treasury curve was more pronounced as investors began to price a higher likelihood of a policy rate hike by the Federal Reserve, and the 2-year Treasury has historically moved in concert with the Federal Funds Rate.
The fact that The Index was able to generate a positive total return with the headwind of higher Treasury yields speaks to the power of coupon income. Corporate bond investors have been able to access more attractive coupons since mid-2022 when the Fed was in the midst of its tightening cycle. Elevated yields (and coupons) provide more downside protection against both wider spreads and higher interest rates.

Bountiful Bonds
The primary market has been booming in 2026. This year has seen the most volume during the first six months since 2020. According to data compiled by Bloomberg the two years are tied at $1.176bln through the first two quarters. In 2020, most of that number came from a surge in borrowing during April, May and June of that year while the pace of issuance in 2026 has been more balanced.i

During 2020, companies were borrowing due to historically low interest rates and an uncertain future amid a global pandemic. During 2026, companies have borrowed for the more typical reasons of M&A and the funding of capital expenditures, especially those related to artificial intelligence (AI) and datacenter buildouts. Hyperscalers have captured the attention of debt and equity investors alike as they have raced to compete for leadership in the next frontier. Six of the largest hyperscalers were responsible for the issuance of more than $150bln of publicly traded debt so far in 2026, and there will be more to come.

Note that the previous chart is only indicative of $USD corporate bond issuance. Most of these issuers have engaged in creative private credit structured finance as well as bond issuance in other currencies. For example, earlier this year ORCL issued a $14bln private credit instrument to fund the construction of a data center in Michigan while AMZN raised more than $25bln USD equivalent in Euro and Canadian Dollar denominated bonds.
Some of the newly minted bonds have performed poorly and SPCX is one of the more glaring recent examples. This merely highlights the need for credit-work and due diligence when evaluating a new bond deal.

There has been a myriad of opportunities in the primary market so far this year but each deal must be evaluated on its own merits to ensure that the compensation is adequate for the risk incurred. We analyze each deal carefully and we end up passing on far more than we invest in on behalf of our clients. The bar is high in order for a new issue to be added to the portfolio.

FOMC: Episode I – A New Era
There were two FOMC decisions during the quarter. The first meeting was at the end of April and it was the last for Jerome Powell as Chair of the committee. While the FOMC elected to keep its rate unchanged, there was some disagreement, as several voting members wanted the Fed to abolish its easing bias. The next meeting was in mid-June and it was Kevin Warsh’s inaugural meeting as newly minted FOMC chair. The Fed again elected to hold its rate steady but it removed previous language that signaled the possibility of further cuts in the near term. Additionally, the Summary of Economic Projections (dot plot) showed that 9 of 18 members expected at least one rate hike by the end of 2026. At the beginning of 2026, interest rate futures were pricing roughly 2.4 cuts, but by the end of the second quarter those same futures were pricing 1.5 hikes. Subsequent to quarter end, there was a nonfarm payroll report for the month of June on July 2nd that missed expectations to the downside and also included a revision lower for May’s payroll report. The unemployment rate actually decreased a tick from 4.3% to 4.2% but this was due to a decline in labor force participation. It was clearly a weak report relative to expectations and interest rate futures reacted in the trading days that followed, pricing the probability of just over one 25bp hike in 2026.ii
We believe that the FOMC will remain data dependent and that the path for the policy rate will be decided over the course of the next few months. Kevin Warsh was selected because he had the blessing of President Trump, who has made it clear that he favors a much lower policy rate. Due to a resilient economy and the inflationary pressures related to the war with Iran it simply isn’t likely that the Fed can deliver a rate cut in the near term. We are also not convinced that a hike is necessarily on the horizon. We believe that the FOMC will continue to be on hold pending additional data regarding the impact of inflation and the health of the labor market. The FOMC is in a difficult spot. One or two hikes will not affect capital formation for healthy investment grade rated companies but hikes would serve to stymie a struggling housing market and they would negatively impact affordability for consumer loans that are tethered to the prime rate. The FOMC meets at the end of July, in mid-September and at the end of October before one last meeting the second week of December.

Choose Wisely
The backdrop for investment grade corporate bonds is quite good. Credit metrics are strong and spreads are tight. We are looking at a market that has the potential for over $2 trillion in new issuance before the book is closed on 2026. There are no shortages of opportunities to invest. Despite all this, I cannot remember a time in the past 15 years when the team responsible for the CAM investment grade strategy has passed on so many deals. A strong market like the one we are in currently can be somewhat of a double-edged sword. Because inflows have been robust and yields are attractive, it is easier for issuers to get things done that they might not otherwise be able to accomplish in a market with a weaker tone. It might be something that seems innocuous, like 5 less basis points in coupon or one or two loose covenants. Maybe the bonds don’t have change of control or the covenant package does not have sufficient guardrails for excess leverage. These things don’t amount to much when times are good but they can mean a lot during a less robust part of the economic cycle. That is not to say that we are scared or skittish; we are finding plenty of good ideas. We are in an environment where we are seeing a lot of investment opportunities that are best described as “barely ok.” That is not good enough for us or our clients. We will continue to construct our client portfolios with an eye toward reducing volatility and mindfulness of being appropriately compensated for risk.
Thank you for your partnership and interest. Please let us know how we can help with any of your bond-related questions.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Past performance is not a guarantee of future results. Gross of advisory fee performance does not reflect the deduction of investment advisory fees. Our advisory fees are disclosed in Form ADV Part 2A. Accounts managed through brokerage firm programs usually will include additional fees. Returns are calculated monthly in U.S. dollars and include reinvestment of dividends and interest. The Index is unmanaged and does not take into account fees, expenses, and transaction costs. Index returns and related data such as yields and spreads are shown for comparative purposes and is based on information generally available to the public from sources believed to be reliable. No representation is made to its accuracy or completeness.
The information provided in this report should not be considered a recommendation to purchase or sell any particular security. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s portfolio. Fixed income investments have varying degrees of credit risk, interest rate risk, default risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities. There is no assurance that any securities discussed herein have been held or will be held in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and, in the aggregate, may represent only a small percentage of an account’s portfolio holdings, if any. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. Upon request, Cincinnati Asset Management will furnish a list of all security recommendations made within the past year.
Additional disclosures on the material risks and potential benefits of investing in corporate bonds are available on our website: https://www.cambonds.com/disclosure-statements/

i Bloomberg, July 1 2026, “US IG OPEN: 1st Half of 2026 Bond Sales Ties 2020”
ii Bloomberg, June 30 2026, “WIRP: World Interest Rate Probability”

26 Jun 2026

Insight, Investment Grade Weekly Josh Adams - Portfolio Manager 0 comment

CAM Investment Grade Weekly Insights

Credit spreads moved slightly wider this week. The OAS on the Corporate Index closed at 75 on Thursday June 25^th after closing the week prior at 73. The 10yr Treasury ended last week at 4.45% and it closed at 4.37% on Thursday evening. Through Thursday, the Corporate Bond Index year-to-date total return was +1.12% and the yield to maturity for the index was 5.16%.

Bond Market Weekly

SpaceX made a splash in the primary market this week when the company launched a $25bln inaugural bond deal across 5 maturities. SpaceX was given investment grade ratings by the three major rating agencies at the end of last week. It is highly unusual for a company that has negative earnings and significant cash burn to have an investment grade rating. As a bond manager, we rely on our own internal research; we like to think of the rating agencies as more of a lagging indicator of the credit health of a company, but in the case of SpaceX, the agencies are giving the company a great deal of credit for financial success that has yet to come. Understandably, the company is also given credit for its strategic partnership with the US government as well as the success of the Starlink portion of its business. SpaceX also benefits from its massive $2 trillion enterprise value and the thought that it could potentially issue equity to support its balance sheet if needed. We are skeptical that SpaceX has done enough at this point in time to have earned an investment grade rating. As a bondholder, the upside for our clients in most bonds is par, or a slight premium to par if a credit outperforms or if the interest rate environment moves meaningfully in a favorable direction. If SpaceX goes absolutely gangbusters the next few years the upside for bondholders is extremely limited relative to equity holders. In our view, the new SpaceX bonds did not offer enough return potential for the risks incurred. The new bonds have underperformed during their first few days of trading, particularly the longer dated maturities.

Looking at the entire primary market, $53.85 billion of new debt was priced this week, which was in line with dealer forecasts. Next week is expected to be on the lighter side with a holiday on Friday for the 4^th of July. Syndicate desks are looking for just $10-$15bln of new supply. Year-to-date issuance through the end of the week was $1.158tril which is up +33% relative to 2025.

Flows

According to LSEG Lipper, for the week ended June 24^th, short and intermediate investment-grade bond funds reported a net inflow of +$2.99bln. 2026 year-to-date net flows into investment grade were +$74bln.

26 Jun 2026

High Yield Weekly, Insight Rich Balestra - Portfolio Manager 0 comment

CAM High Yield Weekly Insights

(Bloomberg) High Yield Market Highlights

US junk bond yields held steady and spreads barely moved as investors remained wary of tech-stocks volatility and stretched valuations. Concerns deepened after data showed US consumer spending accelerated while inflation rose at its fastest pace in more than three years, reinforcing expectations that the Federal Reserve is set to raise interest rates as early as September.
Elevated valuations and persistent inflation concerns pushed yields and spreads on the riskiest tier of the junk bond market – CCCs – to fresh 14-month highs, driving losses in three of the last four sessions. Yields closed at 12.34% and spreads at 805 basis points.
The primary market, however, looked past those concerns, as a supply wave persisted with a steady stream of issuance. Three more borrowers sold $1.75b on Thursday, driving the weekly issuance volume to more than $7b, the busiest since mid-May
Borrowers rushed to take advantage of the still-open capital markets and strong demand before conditions change
The multiple issues sold on Thursday drove June’s volume to more than $33b, the second-biggest month for supply this year

(Bloomberg) US Hot Inflation and Spending Data to Keep Fed Cautious

Hot headline and core inflation, together with a pickup in personal spending, affirm the Fed’s hawkish tilt at the June FOMC meeting. Spending growth was broad-based, and real consumption accelerated even amid high inflation.
A rise in hiring and wage growth has helped to undergird spending in recent months, and elevated tax refunds and favorable wealth effects also have played a role. Declining global energy prices will suppress headline inflation going forward.
The PCE deflator increased 0.45% in May (vs. 0.41% prior), boosting the year-on-year inflation pace to 4.1% from 3.8%. The monthly pace of core inflation jumped to 0.32% (from 0.25%). The year-on-year pace rose to 3.4% from 3.3%.

18 Jun 2026

Insight, Investment Grade Weekly Josh Adams - Portfolio Manager 0 comment

CAM Investment Grade Weekly Insights

Credit spreads moved slightly wider during the holiday shortened week. The OAS on the Corporate Index closed at 73 on Wednesday June 17^th after closing the week prior at 72. Spreads are slightly tighter as we go to print on Thursday afternoon. The 10yr Treasury ended last week at 4.48% and it closed at 4.49% on Wednesday evening. Rates are about 5bps lower across the Treasury curve on Thursday. Through Wednesday, the Corporate Bond Index year-to-date total return was +0.55% and the yield to maturity for the index was 5.24%.

Points of Interest

The main event of the week was Kevin Warsh’s first meeting and press conference as FOMC chair. It was an interesting juxtaposition; Warsh was adamant during the nomination process that the Fed’s policy rate was too high, but his first action as chair was delivering the views of an FOMC that is increasingly thinking about increasing the Federal Funds Rate by the end of the year. The Fed’s dot plot showed nine officials were in favor of at least one hike (six of those were looking for multiple increases) while 8 were expecting no change and just one was looking for a cut. Chairman Warsh did not participate in the dot plot because he does not believe it is “helpful in the conduct of policy.” The voting members of the FOMC were unanimous (12-0) in their decision to leave interest rates unchanged.

With the advent of a new Chairman, a quick history lesson seems prudent. The Fed did not always do regular post-meeting press conferences and it was only formally introduced in April of 2011, and it was only on a quarterly basis. Chairman Bernanke introduced it as a way to increase central bank transparency in the wake of the financial crisis. In 2019, Chairman Powell expanded the press conference practice to occur at the conclusion of every regular scheduled FOMC meeting. Regarding the Summary of Economic Projections, also known as the “dot plot”, this release was formally introduced on January 25, 2012 and has always been done on a quarterly basis since then. The Fed has changed the way it communicates over the years and we expect that Kevin Warsh will add his own mark in the months ahead.

Primary Market

$44 billion in new debt was priced this week through Wednesday, blowing past dealer estimates of $25bln. There are two deals pending on Thursday that will add $5.05bln to that number, bringing the weekly total to almost

$50bln. The biggest deal of the week hit the tape first thing on Monday morning as Nvidia printed $25bln across seven different maturities. Next week, syndicate desks are looking for $50bln of issuance. The word on the street is that SpaceX could make its inaugural foray into the investment grade credit markets as soon as next week with a new deal that could total at least $20bln. The pace of issuance this year remains torrid and is well ahead of 2025, up more than 30% y/y.

Flows

According to LSEG Lipper, for the week ended June 17^th, short and intermediate investment-grade bond funds reported a net inflow of +$5.2bln. 2026 year-to-date net flows into investment grade were +$67.1bln.

15 May 2026

High Yield Weekly, Insight Rich Balestra - Portfolio Manager 0 comment

CAM High Yield Weekly Insights

(Bloomberg) High Yield Market Highlights

US junk bonds rose for a second straight session Thursday, driven by robust corporate profits and strong retail sales data that pointed to resilient consumers.
A steady stream of borrowers in the primary market is driving month-to-date supply to more than $21b, up 33% compared to last year.
Three more borrowers sold bonds for $3.7b on Thursday driving the week’s tally to more than $8b
Spread volatility is historically muted despite dangers from inflation and geopolitics. Strong earnings, high yields, and global supply support credit, Barclays strategists Brad Rogoff and Dominique Toublan wrote on Friday.

(Bloomberg) US Inflation Accelerates as Gas, Rent and Food Prices Climb

US inflation accelerated in April on rising gasoline and grocery costs, exceeding wage growth in a double-whammy for already strained consumers.
The consumer price index rose 3.8% from a year earlier, according to Bureau of Labor Statistics data out Tuesday, the most since 2023. After adjusting for inflation, wages fell for the first time in three years.
The figures show how the impact of the Iran war is hitting the US economy as energy costs surge. The BLS report indicated gas prices rose almost 28% over the past two months. Grocery prices, rents and airfares also saw large increases from a month earlier. A sustained pickup, especially in the cost of essentials, could lead consumers to cut back on spending.
“Inflation, which we thought was under control, is reaccelerating, and that’s a real problem,” said Gus Faucher, chief economist at PNC Financial Services Group. “The longer inflation remains elevated, the more stress that’s going to place on consumers.”
Even if the current ceasefire holds and the Strait of Hormuz reopens soon, economists anticipate higher costs are likely to persist in the months ahead as oil output normalizes and shipping flows recover. Rising prices for fertilizer are expected to result in higher grocery bills, and elevated oil prices could also make other goods and services more expensive as companies seek to pass rising transport costs on to consumers.
One of the main examples in the April CPI data was airfares: They rose 2.8% from a month earlier as the surging cost of jet fuel prompted airlines to raise prices and baggage fees and cut capacity.
The overall CPI advanced 0.6% in April. Grocery prices rose 0.7%, the most in almost four years. Meats, dairy, fresh fruits and vegetables all posted notable gains. Food prices have been a major contributor to affordability concerns in recent years and could play into Americans’ views of the economy heading into midterm elections.
A separate report Tuesday that combines the inflation figures with recent wage data showed that real average hourly earnings fell 0.3% from the year before, marking the first drop in three years.
The core CPI, which excludes food and energy, increased 0.4% from a month earlier and 2.8% from a year earlier, boosted in part by a statistical quirk in the report’s measure of rents resulting from the 2025 government shutdown. Shelter costs were up 0.6% in April, the most in more than two years.
The rent measures are based on rolling samples of rental housing units collected every six months, and the BLS effectively left them unchanged in October because it wasn’t able to collect data during the shutdown. When those units were priced again in April, they captured a year of increases rather than six months’ worth, making the monthly change in rents look about twice as large as normal.
Meanwhile, so-called core goods prices, excluding food and energy, were unchanged thanks to a slump in prices for new vehicles. Economists have been watching for signs that retailers have finished passing on the higher costs from President Donald Trump’s tariffs, even as the risk that higher fuel prices start pushing goods prices up again looms for later in the year. Some categories that are more exposed to tariffs — including apparel and toys — rose at a more moderate pace than in March. Used-car prices were flat.
With the US labor market holding up, Federal Reserve officials are closely tracking the impact the war will have on prices. Investors see little chance of another interest-rate cut in 2026, according to futures, though some economists are still forecasting a reduction later in the year.

15 May 2026

Insight, Investment Grade Weekly Josh Adams - Portfolio Manager 0 comment

CAM Investment Grade Weekly Insights

Credit spreads moved tighter this week but they are a touch softer as we go to print on Friday morning. The OAS on the Corporate Index closed at 74 on Thursday May 14^th after closing the week prior at 77. The 10yr Treasury ended last week at 4.35% and it closed at 4.48% on Thursday evening. The benchmark rate moved higher again on Friday morning as investors expressed disappointment that President Trump’s visit to China did not yield a near term resolution for the closure of the Strait of Hormuz. Through Thursday, the Corporate Bond Index year-to-date total return was +0.03% and the yield to maturity for the index was 5.18%.

Points of Interest

It was a tough week for inflationary pressures. CPI came in hot, with most measures posting readings that were higher than expectations. The PPI release also came in meaningfully higher than consensus estimates. PPI is a measure of inflation at the business or wholesale level, before those prices reach consumers, so it has the potential to act as a leading indicator for CPI and could mean that there are even higher CPI readings coming in the future. Additionally, investors did not receive the news they were looking for as President Trump went China to meet with President Xi Jinping. Market participants were anticipating that China would apply more pressure on its Iranian allies to fully reopen the Strait of Hormuz. Putting it all together, the aforementioned issues, along with a tenuous Iranian ceasefire, have led to an increase in Treasury yields across the entire curve.

In other news, Kevin Warsh was confirmed by the Senate as the new Federal Reserve Chair in a 55-45 vote, the narrowest margin since 1977. Jerome Powell’s term as Chair ends today and Warsh’s first meeting at the helm will occur on June 17^th (The FOMC does not meet in the month of May).

Primary Market

It was a solid week for primary market issuance during the seasonally busy month of May. Investment grade rated companies priced more than $52bln in new debt, almost precisely in line with expectations. Dealers are looking for $40bln next week. Year-to-date new issue supply stood at $903bln through the end of the week.

Perhaps the most interesting piece of news in the primary market this week was not related to the U.S. domestic bond market. Alphabet priced the biggest Japanese Yen bond deal on record from a foreign issuer. The size of the deal was roughly $3.64bln USD. This is interesting for two reasons. First, Hyperscalers are increasingly turning to foreign bond markets to raise capital for their AI-related spending in order to diversify their funding sources. Alphabet has also raised capital in Canadian dollars, British pounds and Swiss francs. Amazon, Meta, Microsoft and Oracle have also tapped foreign bond markets in recent weeks. The fact that these companies are raising capital outside of the US market is supportive of their $USD credit spreads and helps to avoid a negative technical of too much AI supply in our market. The second interesting point is the fact that Alphabet’s deal was the largest ever Yen deal when it was only a mere $3.64bln USD. This is a decent slug of bonds, no doubt, but would hardly draw any attention at all in the US market. This points to the depth and breadth of the US market, which is the largest, deepest and most liquid bond market in the world. Japan is no slouch as the third largest bond market (China is #2), it is just that the US is that much larger and more efficient which is why issuers prefer it for the bulk of their capital raising needs.

Flows

According to LSEG Lipper, for the week ended May 13^th, short and intermediate investment-grade bond funds reported a net inflow of +$4bln. 2026 year-to-date flows into investment grade were +$52.3bln.

08 May 2026

High Yield Weekly, Insight Rich Balestra - Portfolio Manager 0 comment

CAM High Yield Weekly Insights

(Bloomberg) High Yield Market Highlights

US junk bonds stalled and momentum faltered on skepticism that a peace deal between the US and Iran is likely after reports of a US attack on an Iranian oil tanker, which pushed oil prices higher again.
Meanwhile, the primary market shrugged off these developments and continued to see a wave of new supply. Eight deals for more than $5b priced Thursday, driving the week’s tally to nearly $12b, the busiest since mid-April even without any data-center linked issuance.
Eighteen deals priced this week, the most borrowers in a week since September last year
The new issues performed well in the secondary market against the backdrop of rising oil prices and geopolitical conflict

(Bloomberg) US Consumer Sentiment Declines to Record Low on Inflation Angst

US consumer sentiment fell in recent weeks to a fresh record low on concerns about the impact of inflation on personal finances and buying conditions.
The preliminary May sentiment index decreased to 48.2 from 49.8 in April, according to the University of Michigan. The survey period includes responses from April 21 to May 4.
Consumers expect prices to rise at an annual rate of 4.5% over the next year, down slightly from a month earlier, data Friday showed. They saw costs rising at an annual rate of 3.4% over the next five to 10 years.
Confidence continues to languish as Americans’ anxiety about the overall cost of living is compounded by sharply higher prices at the gas pump. The strain on household budgets poses a risk to consumer spending, a primary engine for the economy.
Gasoline prices breached $4.50 a gallon on average this week for the first time since July 2022, American Automobile Association data show. They’re up more than 50% since the start of the Iran war.
The report showed “about one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs,’’ Joanne Hsu, director of the survey, said in a statement. “Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump.”
The current conditions gauge dropped to 47.8, the lowest on record. The expectations index rose for the first time since January.
Consumers’ perceptions of their current financial situation slid to the lowest level since 2009. Buying conditions dropped to a five-month low.
Meanwhile, the government’s April employment report showed employers added more jobs than expected for a second month. Nonfarm payrolls rose 115,000 last month after an even bigger surge in March, marking the strongest two-month increase since 2024.
earlier, data Friday showed. They saw costs rising at an annual rate of 3.4% over the next five to 10 years.
Confidence continues to languish as Americans’ anxiety about the overall cost of living is compounded by sharply higher prices at the gas pump. The strain on household budgets poses a risk to consumer spending, a primary engine for the economy.
Gasoline prices breached $4.50 a gallon on average this week for the first time since July 2022, American Automobile Association data show. They’re up more than 50% since the start of the Iran war.
The report showed “about one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs,’’ Joanne Hsu, director of the survey, said in a statement. “Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump.”
The current conditions gauge dropped to 47.8, the lowest on record. The expectations index rose for the first time since January.
Consumers’ perceptions of their current financial situation slid to the lowest level since 2009. Buying conditions dropped to a five-month low.
Meanwhile, the government’s April employment report showed employers added more jobs than expected for a second month. Nonfarm payrolls rose 115,000 last month after an even bigger surge in March, marking the strongest two-month increase since 2024.

24 Apr 2026

Insight, Investment Grade Weekly Josh Adams - Portfolio Manager 0 comment

CAM Investment Grade Weekly Insights

Credit spreads were modestly tighter on the week through Thursday. The OAS on the Corporate Index closed at 78 on Thursday April 23^rd after closing the week prior at 79. The 10yr Treasury ended last week at 4.25% and it closed at 4.32% on Thursday evening. Through Thursday, the Corporate Bond Index year-to-date total return was +0.42% and the yield to maturity for the index was 5.06%.

Points of Interest

The highlight of the week occurred on Tuesday with Federal Reserve Chair nominee Kevin Warsh’s confirmation hearing before the Senate Banking Committee. Warsh repeatedly stated that he would embrace the role in an independent manner and he reaffirmed his preference for a smaller Fed balance sheet. The Fed’s use of forward guidance was a topic of discussion; Warsh has been critical of the Fed’s signaling and its focus on PCE as its preferred inflation gauge. He argues that Fed forecasts can lead to policy errors instead of allowing decisions to be made based on real-time debate in response to changing economic conditions. On Friday, the DOJ announced that it was dropping the criminal probe of current Fed Chair Powell which may clear the way for Warsh’s confirmation. Next week is Jerome Powell’s last scheduled meeting as Federal Reserve Chair though he has said he will remain on as chair pro tempore if his successor is not confirmed. Fed Funds Futures are pricing almost no chance of a rate cut/hike at next week’s meeting.

It was another light week for economic data but things ramp up next week. Thursday in particular is a busy one with personal income/spending, PCE and GDP releases. Next week is also the height of earnings season in the credit markets with 259 investment grade rated companies reporting. All eyes will be on the hyperscalers as Alphabet, Amazon, Meta and Microsoft will all release earnings on Wednesday afternoon.

Primary Market

Investment grade companies priced $19.3bln of new debt this week, in line with the low end of dealer estimates. Syndicate desks are looking for a similar figure next week. Volume should start to pick up in the first full week of May as many companies will have reported earnings by that time. Year-to-date new issue supply stood at $751bln through the end of the week.

Flows

According to LSEG Lipper, for the week ended April 22^nd, short and intermediate investment-grade bond funds reported a net inflow of +$1.53bln. 2026 year-to-date flows into investment grade were +$39.7bln.

24 Apr 2026

High Yield Weekly, Insight Rich Balestra - Portfolio Manager 0 comment

CAM High Yield Weekly Insights

(Bloomberg) High Yield Market Highlights

US junk bonds are set to snap a three-week streak of gains as the US-Iran standoff unsettles investors and drives oil prices higher. Yields have climbed 19 basis points in the past five sessions to 6.94%.
Meanwhile, still attractive yields and tight spreads produced a supply surge in the primary market. Core Scientific and Edged Compute drove the week’s supply to more than $8.5b, with half of that volume coming from bond sales to fund data center buildouts.
Core Scientific is the fourth borrower in a week to sell bonds for data centers. That helped push monthly volume to nearly $31b, the busiest April since 2021 and the busiest month since September
Data centers alone have accounted for more than $13b in April. Meridian Arc Holdco, CoreWeave and Edged Compute also borrowed to finance data centers
With corporate earnings in focus, guidance and post-earnings supply will be key near-term drivers for credit markets, even as Middle East and AI risks linger, Barclays strategists Brad Rogoff and Dominique Toublan wrote on Friday

12…68 Next →