Corporate Credit Snapshot - March 2026

March 9, 2026

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US

US credit delivered positive returns across the board in February. The final days of the month reinforced the overall theme of flight to quality as investor concerns increased around the likelihood of military intervention in the Middle East. While the AI disruptive theme is unlikely to abate anytime soon, the selling earlier in February created some credit selection opportunities in markets that were more expensively valued at the start of the year. Rising dispersion within credit has now started to point towards improved valuations and yields. Despite intramonth volatility, credit markets remained well-supported and a source of relative stability. Market fundamentals and jobless claims both remained broadly stable this month.

EUROPE

European credit markets generated positive returns across the board in February. The final days of the month reinforced the overall theme of flight to quality as investor concerns increased around the likelihood of military intervention in the Middle East. We have highlighted for some time that real income in the Euro area has increased faster than real consumption, indicating a meaningful reservoir of untapped demand. A recent uptick in consumer confidence could indicate a shift in saving behavior that could, in turn, prove a significant tailwind for consumption in 2026. The European Central Bank’s (ECB's) posture in the near term is anticipated to remain unchanged, with a 2% policy rate still widely viewed as appropriate.

EM

Emerging markets (EM) debt delivered positive returns in February. The final days of the month reinforced the overall theme of flight to quality as investor concerns increased around the likelihood of military intervention in the Middle East. The homebuilders sector proved notably resilient this month, while automotives and basic industrials were among the underperformers. EM issuance in February was subdued primarily due to several factors including the Chinese New Year holiday, the heavy wave of issuance in January, and the broader macro uncertainty toward month-end. At a regional level, the only region to exceed expectations for the month was Eastern Europe, highlighting continued strong demand from European investors.

OUTLOOK

Looking ahead, the geopolitical developments in the Middle East have clearly taken center stage. As we wait to see how events unfold, we remain committed to our view that the global credit landscape remains fundamentally solid—corporate earnings across the public credit markets continue to be mostly healthy, and supportive technicals continue to strengthen historically tight spreads. A status quo for major central bank policy seems most likely in the near-term. In the US, with the US Federal Open Market Committee (FOMC) meeting still a few weeks away, Federal Reserve speakers have been active in expressing their views in advance, with seemingly high odds for no change in policy as there have been few major developments in the labor market, inflation sits persistently above target, and tariff uncertainty lingers. The March meeting will bring a new Summary of Economic Projections delivery and an updated dot plot; the degree of dispersion in those projections should be telling, particularly ahead of the upcoming change in FOMC leadership.

 

Past performance is not a reliable indicator of current or future performance. 

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