Weekly Market Summary

Extra Credit^*

• In recent weeks, the uncertainty around tariffs have affected credit as investors seek to identify which issuers are most exposed to the various proposed and enacted tariffs. This has also driven many companies to address the tariff issues by dedicating time to explain how their work streams may be affected.
• Overall, mentions of tariffs by S&P 500 companies have soared in the months. When looking at Bloomberg's AI tool for number of tariff mentions, the three-month moving average of tariff mentions has jumped to 398 in February, up from 37 in the month prior to Trump's election and up from just four mentions in January 2024. Additionally, mentions of tariffs have spiked in February's ISM services and manufacturing reports.
• As it relates to corporate debt, for the full quarter, 41% of tariff mentions in investment grade were negative, whereas 33% were negative for high yield. Broadly, high-yield issuers tend to be less negative than investment-grade issuers on a net basis. That is likely because high-yield issuers are more domestic based than investment-grade issuers, which are more globally exposed.
• Bank-loan and high-yield bond default rates, excluding distressed exchanges, finished February at 1.26% for high-yield bonds and 0.27% for bank loans, down from 1.50% and 0.30% in January. 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 3/17/25.