JPM High-Yield and Leveraged Loan Morning Intelligence

Research evidence excerpt

JPM High-Yield and Leveraged Loan Morning Intelligence

the $70bn of yearly coupons which are assumed to be reinvested back into the marketplace. We

expect the high-yield bond market to grow $100bn in 2026 amid an acceleration in net new issuance.

--Overnight Price Action: S&P Futures are up 75bp overnight with the NASDAQ rallying 2.2% led by a

surge in semiconductor stocks (SOXX: +5%) following upbeat earnings from a major chip manufacturer

(link). Meanwhile, Brent continues to edge lower to $73 and has now erased its wartime gains (link), while

10yr Treasury yields rise 2bp ahead of today’s durable goods, initial claims, and PCE report at 8:30am

alongside 2 Fed speakers. Our economists expect the core PCE deflator to have risen 0.31% m/m in May,

lifting the year-ago pace from 3.3% to 3.4% and look for real consumption to have risen 0.1%. Note, our

equity strategists raised their YE26 price target for S&P500 to 7,800 (2026 EPS +29% y/y $350, 2027

EPS $390) reflecting upward revisions to consensus earnings growth (~20% over the next two years),

alongside a near doubling in AI capex (link). As well our Oil strategists lowered their Brent outlook for

2H26 (still higher versus today) and 2027 as OECD commercial inventories draws have come in below

expectations, while demand losses have been larger than expected. They now forecast Brent averaging

$86 in 3Q26 (vs $73 now) and $80 in 4Q26, exiting 2026 at $78, and averaging $64 in 2027 (link).

Such a path would remove a significant inflationary impulse as the %3m contribution to headline CPI

would likely turn negative in July. The ensuing boost to household purchasing power should coincide with

an expected pickup in employment. However, the Control group figure of our Chase Card data points to a