Weekly Market Summary

Extra Credit^*

• Not surprisingly, mentions of tariffs by S&P 500 companies skyrocketed around “Liberation Day” on April 2. Bloomberg's AI tool has identified the three-month moving average of tariff mentions has soared to over 543 in April, which is more than double the total for January. For context, the 3-month moving average of mentions was just 37 in the month prior to Trump's election and just four in January 2024.
• In investment-grade credit, although the majority of earnings reports so far have been financials, which should face fewer direct effects from tariffs, 17 of 21 those issuers mentioned tariffs, and of those, seven pointed to negative effects.
• On the high-yield side, issuers tend to be more domestic-based versus investment-grade issuers, which are more globally exposed. The more-domestic nature of high-yield companies should shield these issuers better from the primary effects of tariffs, but secondary effects such as an economic slowdown could be detrimental.
• High-yield-bond option-adjusted spreads widened nearly 120 basis points following the April 2 tariff announcement and retraced only 27 basis points when the 90-day pause was announced the following week. The index is now around levels last reached in the fall of 2023.
• Bank-loan and high-yield bond default rates, excluding distressed exchanges, finished the month at 1.24% and 0.27%, down from 1.26% and flat from 0.27% in February. This is also well below the long-term historical default rate of 3% for loans and 3.4% for high yield, and the historical post-GFC default rates of 2.3% and 2.5%, respectively.

Sources: Bloomberg and JP Morgan as of 4/21/25.