Big Picture: Back to Local Wides

Research evidence excerpt

Big Picture: Back to Local Wides

Sales & Trading

US Macro Credit Trading J P M O R G A N

20 July 2026

FOR INSTITUTIONAL & PROFESSIONAL CLIENTS ONLY – This material is from a Sales and Trading department and is not a product of the Research Department.

Broad cross-asset risk markets feel tired and nervous to us, while the tone in macro credit was more mixed. This past week,

equities drifted lower into Mag6 earnings; rates struggled to move off the wides despite cooler-than-expected CPI and PPI reports;

and IG credit investors are still digesting recent issuance. In sympathy with all this, CDX IG and HY drifted back towards the

wider bound of their relatively narrow 2-month spread ranges. Meanwhile, cash markets stabilized after 3 weeks of

underperformance.

We see room and are positioned for a relief rally on the linear side this coming week, while staying mindful of the potential for

more volatility both ways as we move into the second half of summer. In both CDX and ETF options, we continue to see heavier

than usual interest from accounts to hedge for this. Conversely, flows in tranches and TRS are overwhelmingly bullish: mezzanine

risk is changing hands at the tights of the year, and iBoxx IG and HY discounts to NAV have nearly evaporated. Details on all

below.

Upcoming Week Calendar Events: Jobless Claims (07/23), S&P Global US PMI (07/24), Durable Goods Orders (07/27)

Trader Commentaries

Ben Burke / Tyler Edmisten (ETF cash)

• LQD: +1bps wider w/w (vs CDX.IG +1.2bps)

• IG ETF volumes were 16% below the 1m average

• VCSH unch’d, VCIT +0.8bp, VCLT +1.5bp

• Desk skew was 1.2x better to buy

• Flat fund flows across IG ETFs

• HYG: +7.25bps wider w/w (vs CDX.HY +6.1bps)

• HY ETF volumes were 18% below the 1m average

• Desk skew was better to sell led by asset managers