KBRA Releases Research – The Forward Look—European and UK Credit Views: Q2 2026

KBRA releases the latest quarterly report highlighting our European Macro Strategist Gordon Kerr’s view on key economic indicators, as well as what he identifies as the most influential factors driving credit markets in the upcoming quarter. The report also examines credit market valuations in the context of current and future market conditions.

KBRA examines how the Iran conflict and Strait of Hormuz disruption are reshaping the European credit outlook. While the shock has so far been more contained than the 2022 energy crisis, rising commodity prices, weaker sentiment, and elevated inflation expectations are increasing stagflation risks and delaying Europe’s expected growth turnaround. Credit markets remain supported by resilient corporate performance, low defaults, capital expenditure tied to infrastructure, defence, and technology, and attractive all-in yields despite historically tight spreads. However, higher benchmark yields, fiscal constraints, and softer consumer and services activity present meaningful headwinds. Manufacturing momentum is showing early signs of improvement, which could help offset some pressure in the quarters ahead.

Click here to view the report.