Our base case assumes a continuation of the constructive backdrop for credit, where economic growth at or around trend and relatively easy financial conditions are producing solid—if not extraordinary—earnings growth and manageable defaults.
Nevertheless, macro uncertainty remains elevated despite historically tight spreads. What are we watching? The promise of artificial intelligence (AI); the health of the labor market; the resilience of consumer spending; the long end of the yield curve; and the price of oil distillates.
Credit spreads have proven to be relatively resilient to geopolitical developments, idiosyncratic credit deterioration, and technical pressures related to heavier-than-expected new issue supply. We expect demand across all but the riskiest part of the credit curve to remain strong on account of attractive income and durability considerations.
The View: Our Macro Forecasts
U.S. Real GDP Growth 2026 Estimate—2.2%…
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