Macro Uncertainty's Economic Effects

PGIM identifies robust U.S. growth at 2.5%+ but warns of sticky inflation and shifting global risks toward stagflation due to geopolitical tensions and oil shocks. Market technicals remain strong across IG and HY despite high issuance and tight spreads.

Key Takeaways

• 1.U.S. growth is projected to be above trend at 2.5%+ over the next 12 months, supported by fiscal policy, AI investments, and upper-income consumer strength.
• 2.Geopolitical uncertainty and potential oil shocks have shifted 5pp of probability from growth-oriented scenarios to a 'Mild Stagflation' case for Europe, China, and the U.S.
• 3.IG corporate issuance has hit record levels, driven by hyperscalers investing in AI and record global M&A activity ($105B in Q1).

Table of Contents

• MACRO
• DEVELOPED MARKET RATES
• IG CORPORATES
• LEVERAGED FINANCE
• EMERGING MARKETS
• SECURITIZED PRODUCTS
• MUNICIPALS
• THE RETURNS TABLE AS OF MAY 8, 2026

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