Global Credit: What We‘re Watching

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Global Credit: What We‘re Watching

July 6, 2026 05:30 PM GMT

GLOBAL CREDIT STRATEGY

M O R G A N S T A N L E Y R E S E A R C HGlobal Credit: What We’re Watching Global

A small favor: The Extel Global Fixed Income Survey is now open. If you have enjoyed our research, we'd appreciate your support in the Investment Grade, Morgan Stanley & Co. LLC

High Yield Strategy. and Credit Derivatives Strategy categories across US/EU/Asia. Thank you, and please reach out with any questions. Vishwas Patkar

Strategist

Key Recommendations: This week we outline our key recommendations across credit. In the US, we expect a gradual steepening of the 10s30s curve, driven Vishwas.Patkar@morganstanley.com

by a modest decline in front-end yields. In Europe, we favor a barbell of sub-5y and long-end IG bonds. With worsening fiscal trends and rising election risk +1 212 761 8041

premiums on the horizon, we recommend buying protection on French banks versus selling iTraxx Senior Financials to hedge against further widening in OATs.

Morgan Stanley & Co. International plc+

US Investment Grade: US IG spreads tightened 2bp last week, partially retracing the prior two weeks' widening and delivering excess returns of 0.1%. Spread Aron Becker

curves bull-flattened and BBBs outperformed. Across sectors, transport, media, and utilities delivered the strongest excess returns, while banks, autos and Strategist

telecoms lagged. US IG funds saw $6.87bn of net inflows last week, the third largest flow this year, lifting YTD inflows to +$90.75bn. Primary market activity was Aron.Becker@morganstanley.com

slowed down ahead of the holiday weekend, with $18bn of bonds pricing last week. YTD supply is tracking at $1,291bn (+28% YoY). +44 0(207) 677 0754

Ellie Dann