Credit Calls

J.P. Morgan's daily credit update highlights a steepening belly in the HG spread curve and strong technical demand for credit driven by record $10.3bn/week inflows. Despite 1Q26 earnings beats in consumer products, margins face compression from rising costs and tariffs.

Key Takeaways

• 1.The High Grade spread curve is steepening in the 5s10s belly (up 1bp to 22bp) while the 10s30s long end remains near its flattest point since January.
• 2.Consumer Products 1Q26 earnings were better than feared with 22 beats, yet gross profit margins (GPM) contracted by 7bps due to inflation and tariff headwinds.
• 3.Month-end trading for US HG is expected to be highly active as the index net expands by $52bn and HG fund inflows surged to $10.3bn per week.

Table of Contents

• Strategy & Sector Commentary
• HG & HY Consumer Products: 1Q26 Earnings Recap and Takeaways
• HG Energy Rel Val Snapshot: 1Q26 Quarterly Recap; PTEN Update Implies Inflection in US Shale Activity
• US HG Month-Ender: Month-end trading likely to be active as index grows and passive flows increase
• Company Comments
• Important Disclosures
• Other Disclosures

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