Big Picture: A Sharper Selloff

Research evidence excerpt

Big Picture: A Sharper Selloff

Sales & Trading

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

27 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.

We had many crosscurrents in credit this week, from tech earnings, to geopolitics, to a further break higher in rates. All these

macro inputs are in some ways circular/ feeding off each other, but in other ways each represent a unique headwind for spreads to

navigate. Price action was overall bearish as we broke out of the multi-month ranges. Derivatives and cash spreads both moved

wider and notably with less resistance than was characteristic of earlier July selloff.

With markets feeling less stable, it is perhaps no surprise that we saw implied volatility in front-end options snap higher, albeit

from historically low levels. Curves also bear flattened, especially in the long end. Rolls steepened but idiosyncratically, as new

AI-heavy indices (IG46, HY46) underperformed older series.

With the price action only getting choppier to end the week, we expect more interesting opportunities will present themselves in

the coming weeks. Thank you for all the trades and speak soon.

Theo

Upcoming Week Calendar Events: FOMC Rate Decision (07/29), GDP Annualized QoQ (07/30), Jobless Claims (07/30), U.

of Mich. Sentiment (07/31)

Trader Commentaries

Mehul Manian (CDX on-the-run index)

• Mixed week in CDX. The tone started off very calm in the first half of the week, with healthy two way flow between HF's that

bought risk and asset managers that net sold risk, only turn to more decidedly bearish as flows turned more heavily to sell risk

on Thursday and Friday.