JPM High-Yield and Leveraged Loan Morning Intelligence

Research evidence excerpt

JPM High-Yield and Leveraged Loan Morning Intelligence

als Checkup: Strong earnings growth provides buffers; Hong

--US: About the money; Feroli

--BoJ preview: Bold outlook, cautious execution; Fujita

--US High Yield and Leveraged Loan Analyst Focus List; JPM Credit Research

--2Q26 High-Yield Portfolio Analysis; Jantzen

--High Level Overview: Note the latest US Credit Market Liquidity: 1H26 Update was published.

Liquidity increased dramatically, but that increase was concentrated in higher-rated products.

Aggregate trading activity was up +28% y/y in HG versus just +5% in HY and -3% in Loans/CLOs. The

same skew showed up in ETFs (+34% HG vs +4% HY) and CDX (CDX.IG +41% vs CDX.HY +10%). AI,

hyperscalers and private credit reshaped where credit trades. Technology and Media were sectors with the

largest turnover in both HG and HY. Turnover in the AA-and-higher bucket grew 40% y/y and long-end

turnover increased 10% y/y due to the contribution of hyperscalers. The same themes drove derivatives and

hedging with CDX.IG volumes +41% and Technology single-name CDS +210% vs its 4-year average,

while loan and CLO macro products’ liquidity declined. Portfolio trading re-accelerated sharply in HG but

the liquidity dividend is fading. HG portfolio trading jumped to a record 21% of investor activity (+33%

y/y), outpacing the growth in HY PT trading (15%). Market breadth improvement has arguably stalled with

the concentration of total trading to the top 20% names in HG stuck at 82.3% for three straight years and

rarely-traded bonds ticking back up from their 2024 trough. On the HY side, concentration and breadth

continues to improve, albeit at a slower rate. We are reaching the point where portfolio and algorithmic