HG Credit Foreign Demand Monitor: FAB index up to highest since April 2025 on lower hedging costs; TWD ETFs back to modest inflows

Research evidence excerpt

HG Credit Foreign Demand Monitor: FAB index up to highest since April 2025 on lower hedging costs; TWD ETFs back to modest inflows

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

03 August 2026

HG Credit Foreign Demand

Monitor

FAB index up to highest since April 2025 on lower

hedging costs; TWD ETFs back to modest inflows

• FAB: Our JPM Foreign Attractiveness of USD IG Bonds (FAB) index rose North America Corporate Credit -

12bp WoW to 61bp, the highest since April 2025. The move higher was almost Investment Grade Strategy

entirely driven by hedging costs falling an average of 10.4bp lower led by post- Nathaniel Rosenbaum, CFA AC

FOMC front-end rate repricing, as the market reduced both the probability and (1-212) 834-2370

magnitude of near term Fed hikes, while the mixed BoE delivered a more muted nathaniel.rosenbaum@jpmorgan.com

reaction in GBP. The subsequent BoJ hold and yen-buying intervention drove J.P. Morgan Securities LLC

a sharp appreciation in JPY but did not reverse the improvement in hedging costs Silvi Mantri AC

and in fact they are modestly lower post intervention. As such, hedging costs fell (1-212) 834-7239

silvi.mantri@jpmchase.com

for every currency in EMEA and most in APAC in our cohort last week. The J.P. Morgan Securities LLC

index was further supported by a modest increase in USD IG corp yields by Matthew Bailey

1.4bp WoW while foreign government yields were about unchanged. (44-20) 7134-2384

• EMEA: For EUR investors, the USD IG yield pickup rose 12bp WoW to matthew.a.bailey@jpmorgan.comJ.P. Morgan Securities plc

+59bp given an 11bp decrease in hedging costs to 1.45%. For GBP investors,

the yield pickup improved more moderately by 4bp WoW to +52bp. USD IG

Corps are now screening more attractive versus EUR corporates for most