European Credit Strategy 2026 Mid-Year Outlook: There Will Be Oil

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European Credit Strategy 2026 Mid-Year Outlook: There Will Be Oil

Daniel Lamy AC Europe Credit Research

(44-20) 7134-0467 17 June 2026 J P M O R G A N

daniel.lamy@jpmorgan.com

Macro Overview: There Will Be Oil

Daniel Lamy AC

(44-20) 7134-0467 Executive Summary

European credit continues to defy a host of headwinds, facing down concerns over

AC private credit spillovers and ‘AI disruption risk’, record supply led by USMatthew Bailey

(44-20) 7134-2384 hyperscalers, and of course a(nother) global energy shock. The last of these has

matthew.a.bailey@jpmorgan.com upended the positive macro environment that we were looking for heading into the year.

Our economists have revised down their 12m-ahead growth forecasts by a

J.P. Morgan Securities Plc cumulative 1.2% since the start of March (Figure 2J.P.MorganForecastRevisionIndices,%), and the ECB has already hiked

rates once, with further tightening priced-in for Q3.

In spite of these headwinds, spreads are largely unchanged on the year, at 87bp in

IG and 310bp in HY. Even during the March weakness, spreads were far more

contained than during the 2025 tariff sell-off, reaching wides of just 110bp in high grade

and 375bp in high yield.

In part we think this is due to defensive positioning early in the year and solid demand,

particularly from yield-sensitive investors, although lately we’ve seen slowing inflows

into European credit retail funds. It’s also helped that oil prices have not been high

enough for long enough to dent fundamentals. First quarter earnings also saw the

strongest y/y EBITDA growth since 4Q22 for European high grade issuers, and ratings

been upgraded on aggregate for each month over the past 2 years.

Figure 1: Select Economic and Policy Rate Forecasts Figure 2: J.P. Morgan Forecast Revision Indices, %