High Grade Manufacturing: 3Q26 Handbook

Research evidence excerpt

High Grade Manufacturing: 3Q26 Handbook

J P M O R G A N North America Credit Research

16 July 2026

High Grade Manufacturing

3Q26 Handbook

North America Corporate Credit -

Autos & Auto Parts and

Manufacturing (IG)

Evan Piascik AC

(1-212) 834-4432

evan.piascik@jpmchase.com

• There are more important things in life than winning or losing a game. We Max Berman

refreshed our High Grade Manufacturing Handbook ahead of the 2Q26

(1-212) 834-2380

earnings cycle beginning next week. Data center and AI infrastructure demand max.berman@jpmorgan.com

remains a dominant theme across the sector while supporting order and J.P. Morgan Securities LLC

backlog growth for the credits with related exposure. Tariffs have remained

topical given the updated structure for steel and aluminum tariffs under Section

232 that are now based on finished product value (see our 2026 Mid-Year

Outlook for additional details), but direct tariff impacts remain manageable

overall. The Middle East conflict emerged as an incremental headwind in 1Q26

given the higher fuel/logistics, raw material cost inflation, and broader

macroeconomic weakness that have pressured performance, though we note

that the direct impacts are generally immaterial across our coverage. Please

find within our updated thoughts on CARR, CAT, DE, ETN, EMR, GEV, HON,

IR, JCI, MMM, OTIS, RRX, RSG, TT, VRT, WCNCN, and WM.

• Every year I try to grow as a player and not get stuck in a rut. M&A-related

spending has notably accelerated since our last Handbook, largely

concentrated in the High Grade Building Materials space, including CRH’s

agreement to acquire Arcosa for $8.5 billion and MLM’s agreement to acquire

Lhoist North America for $13.5 billion (including $7 billion cash). We would