Stars, stripes & spreads

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Stars, stripes & spreads

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Consumer & Retail

Industry Overview

Consumer resilience, refunds, debt mgmt, M&A close 1H 07 July 2026

Entering 2H26, market themes remain attentive to the Strait of Hormuz opening (thus High Grade Credit

WTI oil fell <$70/bb & input costs cooled following the war-driven surge), pace of supply United States

after June’s >$200bn blitz, hyperscaler/semiconductor volatility, inflation trends relative Retailing & Consumer

to hawkish Fed messaging, and Consumer resilience. Supporting the macro backdrop,

Brian Callen, CFA

June unemployment edged down to 4.2% (-0.1% m/m), while hourly wages increased Research Analyst

+0.3% m/m. The Conference Board's consumer confidence index also improved to 91.2, BofAS +1 646 855 8987

up from 90.6 in May. Last week, the ICE BofA IG Index tightened -2bps (-0.38% TR) brian.callen@bofa.com

w/w. Both Cyclicals (-2bps) and Non-Cyclicals (-3bps) underperformed, returning to - Avantika Pedamallu

0.43% and -0.39%, respectively. New issuance was light given the holiday-shortened ResearchBofAS Analyst

week ($18.2bn) including $1.5bn from Imperial Brands. +1 646 855 7557

avantika.pedamallu@bofa.com

Shifting to notable sector news, in Food (-2bps), McCormick & Co. (MKC) 2Q26 beat

our est.’s on accelerating Flavor Solutions segment with margin upside from tariff

refunds which offset the U.S. Consumer business. FY26 guidance was reaffirmed. Exhibit 1: Markets w/e 07/02/26

Regarding the pending Unilever Foods transaction, MKC has generated strong YTD cash Last week's market performance

allowing for just $1.5-2bn of debt paydown over 2 years to reach ~3x leverage and will Market Value WoW

further target 2-3x net leverage LT. We reiterate Overweight given a favorable view of IG ICE BofA Index 75 (1)