Pending Home Sales

• U.S. pending home sales jumped 3.3% in November to the highest level since February 2023, beating expectations 
• Improved affordability from lower mortgage rates, faster wage growth, and more inventory helped drive the surge in buyer activity
• Sales increased across all regions as 30-year mortgage rates fell to around 6.18%, near recent lows

Initial Jobless Claims

• Weekly jobless claims fell unexpectedly to 199,000, the lowest level since late November, beating forecasts 
• Despite fewer layoffs, hiring remains weak, with job growth slowing sharply and unemployment stuck around a four-year high of 4.6%
• The unusual “no hire, no fire” labor market is complicating the Fed’s decision on whether to cut rates further in 2026

FOMC Minutes

• Fed officials were sharply divided at the December meeting, with the rate cut described by some as a “finely balanced” decision
• Most policymakers backed the cut to support a cooling labor market, while others warned inflation progress may have stalled
• The Fed signaled it may pause further cuts in 2026 as rates near neutral and officials await clearer inflation and jobs data

U.S. Tariff & Trade

• The Trump administration announced the postponement of planned tariff hikes on furniture, kitchen cabinets, and vanities by one year to allow further trade negotiations, keeping existing 25% duties in place until 2027
• Steel protectionism is expanding globally, with Canada implementing a 25% tariff on steel derivative products effective December 26, and India announcing a three-year safeguard tariff of 11%–12% on select steel imports to protect domestic producers
• The U.S. scaled back proposed anti-dumping tariffs on Italian pasta, reducing preliminary duties to 2%–14% from threatened levels as high as 92% following a review by the Department of Commerce; the duties would be in addition to the existing 15% EU tariff, and apply to 13 producers representing roughly 16% of Italian pasta imports after President Trump accused the Italian manufacturers of selling at unfairly low prices

Jobless Claims

• Initial jobless claims, a measure of how many workers were laid off across the U.S., decreased to 199,000 in the week ended December 26, down 16,000 from the prior week.
• The four-week moving average was 218,750 up 1,750 from the prior week.
• Continuing claims - those filed by workers unemployed for longer than a week - decreased at 1.866 million in the week ended December 19. This figure is reported with a one-week lag.

Fed’s Balance Sheet

• The Federal Reserve's assets totaled $6.641 trillion in the week ended January 2, up $59.4 billion from the prior week.
• Treasury holdings totaled $4.228 trillion, up $9.8 billion from the prior week.
• Holdings of mortgage-backed securities (MBS) were $2.04 trillion in the week, down $12.9 billion from the prior week.

Total Public Debt

• Total public debt outstanding was $38.51 trillion as of January 2, an increase of 6.5% from the previous year.

GDP

• The latest annualized U.S. GDP stands at $30.49 trillion as of June 30, 2025, an increase of 1.48% from the previous quarter , & an increase of 4.59% from the previous year
• The total public debt-to-GDP ratio is at 118.78% as of June 30, a decrease of -0.72% from the previous year

Inflation Factors

CPI:

• The consumer-price index rose 2.7% in November year over year.
• On a monthly basis, the CPI increased 0.2% in November on a seasonally adjusted basis, after flat 0.0% in October.
• The index for all items less food and energy (core CPI) rose 0.2% in November, after remaining flat 0.0% in October.
• Core CPI increased 2.6% for the 12 months ending November.

Food & Beverages:

• The food at home index increased 1.9% in November from the same month a year earlier, and decreased -0.2% in November month over month.
• The food away from home index increased 3.7% in November from the same month a year earlier, and increased 0.5% in November month over month.

Commodities:

• The energy commodities index increased 0.7% in November after decreasing 0.0% in October
• The energy commodities index rose 1.2% over the last 12 months
• The energy services index rose 0.1% in November after decreasing 0.0% in October
• The energy services index rose 7.4% over the last 12 months
• The gasoline index rose 0.9% over the last 12 months
• The fuel oil index rose 11.3% over the last 12 months.
• The index for electricity rose 6.9% over the last 12 months.
• The index for natural gas rose 9.1% over the last 12 months.

Supply Chain:

• Drewry’s composite World Container Index increased to $2212.79 per 40ft container for the week of January 2
• Drewry’s composite World Container Index has decreased by (41.8%) over the last 12 months.

Housing Market:

• The shelter index increased 0.2% in November after decreasing 0.0% in October
• The rent index increased 0.2% in November after decreasing 0.0% in October
• The index for lodging away from home decreased (8.2%) in November after decreasing 0.0% in October.

Federal Funds Rate

• The effective Federal Funds Rate is at 3.64% , down (0.69%) year to date.

Middle East

• President Donald Trump warned the U.S. could intervene if Iran violently suppresses protests, escalating pressure on Tehran
• Iranian hard-liners signaled a tougher crackdown as demonstrations spread nationwide, fueled by a collapsing currency, surging inflation, and long-running sanctions tied to the nuclear standoff
• Saudi Arabia issued an ultimatum to the U.A.E. to withdraw forces from Yemen, warning it would act to protect its security after clashes between rival-backed militias
• The U.A.E. said it would pull remaining troops, but continued backing of local allies risks prolonging tensions and complicating U.S. efforts to manage regional conflicts and contain Iran

Europe

• Ukraine is seeking U.S. security guarantees lasting 30-50 years, pushing back on President Donald Trump’s proposed 15-year pledge as insufficient to deter future Russian aggression
• Talks advanced on guarantees and postwar support, but major sticking points remain over territory in eastern Ukraine and control of a nuclear power plant occupied by Russia
• Russia has intensified drone and missile strikes on Odesa to disrupt Ukraine’s grain exports and weaken its economic lifeline
• The attacks come as peace talks continue, underscoring Kyiv’s push for more air defenses from the U.S. to protect ports, power grids, and trade routes

China

• Xi Jinping said China is on track to meet its 2025 growth target of around 5%, highlighting advances in AI, semiconductors, and military modernization despite economic headwinds
• His New Year message emphasized confidence, state-led development, and national strength while affirming Beijing’s hard line on Taiwan amid ongoing regional tensions
• China signaled it will not retreat from Latin America, releasing a new policy paper that emphasizes expanded economic, diplomatic, and strategic influence despite U.S. pushback
• The stance sharpens competition with the U.S., as China expands trade, infrastructure investment, and diplomatic pressure to sideline Taiwan in the region

Thailand

• Thailand and Cambodia agreed to an immediate cease-fire to halt weeks of deadly border clashes that have killed at least 22 civilians

Nigeria

• The U.S. carried out missile strikes on Christmas Day against two alleged Islamic State camps in Nigeria, firing more than a dozen missiles from a Navy warship and killing multiple militants, according to U.S. officials

Venezuela

• The U.S. Coast Guard is pursuing the sanctioned oil tanker Bella 1 in the Atlantic, assembling elite boarding teams and military support after the vessel refused inspection and fled; U.S. officials say the ship is linked to Iranian and Venezuelan oil networks and is under a judicial seizure order

Canada

• British Columbia’s Supreme Court ruled that a group of indigenous tribes held the right to about 730 acres of privately held land. The ruling may open the doors for other indigenous groups to press their claims, causing uncertainty in the real estate market

Australia

• At least 11 people were killed when two gunmen opened fire during a Hanukkah event at Sydney’s Bondi Beach in what authorities called a terrorist attack targeting the Jewish community; one suspect was killed and another is in critical condition

UK

• The U.K. economy shrank for a second straight month in October, contracting 0.1% as weakness in the services sector, including retail, dragged on growth

India 

• Russian President Vladimir Putin is visiting India to bolster ties by offering discounted Russian oil and military hardware, even as India faces U.S. tariffs over its Russian oil imports and seeks to maintain leverage with Washington while securing energy and defense needs

Oil Prices

• WTI: $57.42 per barrel
• (1.59%) WoW; (18.60%) YTD; (19.12%) YoY
• Brent: $60.85 per barrel
• (2.23%) WoW; (16.43%) YTD; (18.48%) YoY

US Production

• U.S. oil production amounted to 13.8 million bpd for the week ended December 26, down 0.0 million bpd from the prior week.

Rig Count

• The total number of oil rigs amounted to 545, up 3 from last week.

Inventories

Crude Oil

• Total U.S. crude oil inventories now amount to 422.9 million barrels, up 1.8% YoY.
• Refiners operated at a capacity utilization rate of 94.6% for the week, down from 94.8% in the prior week.
• U.S. crude oil imports now amount to 6.525 million barrels per day, down (12.1%) YoY.

Gasoline

• Retail average regular gasoline prices were $2.83 per gallon in the week of January 2, down (7.6%) YoY.
• Gasoline prices on the East Coast were $2.90, down (5.5%) YoY.
• Gasoline prices in the Midwest were $2.69, down (9.0%) YoY.
• Gasoline prices on the Gulf Coast were $2.49, down (8.2%) YoY.
• Gasoline prices in the Rocky Mountain region were $2.56, down (14.8%) YoY.
• Gasoline prices on the West Coast were $3.87, down (1.0%) YoY.
• Motor gasoline inventories were up by 2.9 million barrels from the prior week.
• Motor gasoline inventories totaled 228.5 million barrels, down (1.3%) YoY.
• Production of motor gasoline averaged 9.47 million bpd, up 5.7% YoY.
• Demand for motor gasoline was 8.563 million bpd, up 4.8% YoY.

Distillates

• Distillate inventories increased by 0.2 million in the week of January 2.
• Total distillate inventories were 123.7 million barrels, up 0.7% YoY.
• Distillate production averaged 5.234 million bpd, down (2.6%) YoY.
• Demand for distillates averaged 3.379 million bpd in the week, up 4.5% YoY.

Natural Gas

• Natural gas inventories decreased by 166 billion cubic feet last week.
• Total natural gas inventories now amount to 3,375 billion cubic feet, down (1.1%) YoY.

High-yield:

High yield bond yields decreased 8bps to 6.62% and spreads decreased 5bps to 300bps. Leveraged loan yields decreased 3bps to 7.86%, while spreads remained unchanged at 455bps. WTD high yield bond returns were positive 28bps. WTD leveraged loan returns were positive 15bps. 10yr treasury yields increased 4bps to 4.17%. High yield and leveraged loans were up this week, supported by strong macro momentum as US jobless claims declined, reinforcing risk appetite.

Week ended 01/02/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (trading in excess of 1,000 bps)²

Total HY Defaults

Leveraged loans:

Week ended 01/02/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (loan price below $80)¹

Total Leveraged Loan Defaults

Default activity: 

• Most recent defaults include: New Fortress Energy ($3.5bn, 11/15/2025), Packers Sanitation Services ($1.2bn, 11/5/2025), Office Properties Trust ($1.7bn, 10/31/25), GPS Hospitality ($400mn, 10/30/25), Jordan Health Services ($1.0bn, 10/15/25), Astra Acquisition ($1bn, 9/30/25), First Brands ($4.4bn, 9/29/25), Spirit Airlines ($852mn, 8/29/25), ModivCare ($1.1bn, 8/20/25), Anastasia Beverly Hills ($606mn, 8/11/25), Claire’s Stores ($506mn, 8/6/25).

CLOs: 

Week ended 01/02/2026

New U.S. CLO Issuance²

New U.S. CLO YTD Issuance²

Note: High-yield and leveraged loan yields and spreads are swap-adjusted

¹ Source: Credit Suisse High Yield and Leveraged Loan Index

² Source: JP Morgan

Ratings activity: 

• S&P and Moody’s High Yield Ratings

Appendix: 

Diagram A: Leveraged Loan Trading Levels

Diagram B: High Yield and Leveraged Loan LTM Price  

Diagram C: Leveraged Loan and High Yield Returns 

Diagram J: New Issue - Leveraged Loan and High Yield

Diagram K: Leveraged Loan + HY Defaults by Sector – LTM 

Diagram L: CLO Economics 

Diagram M: Developed Country Govt. Bond Yields (%)

Diagram N: S&P 500 Historical Multiples

Diagram O: U.S. Middle-Market M&A Valuations (EV/EBITDA)

Diagram P: U.S. Large Cap M&A Valuations (EV/EBITDA)

Diagram Q: Dry Powder for All Private Equity Buyouts ($B)

Diagram R: Dry Powder for All US Debt ($B)

Diagram S: Structured Credit Spreads

Diagram T: Structured Credit Yield

Diagram U: SOFR Curve

Diagram V: CMBS Spreads 

ZCGC Real Estate

• Mortgage-rate shock is freezing demand, not supply
  
• 30-year mortgage rates remain structurally high relative to incomes, pricing out marginal buyers even as sellers slowly re-enter the market due to life events
• Sellers are no longer “locked in,” buyers still are
  
• Job changes, divorce, inheritance, and relocation are forcing listings, while buyers remain constrained by monthly payment math, not home prices alone
• Affordability is the binding constraint, not inventory
  
• Even with more listings, payment-to-income ratios are near cycle highs, keeping first-time buyers sidelined
• Psychology flipped faster for sellers than buyers
  
• Sellers see peak pricing behind them and are acting before further softening; buyers expect better deals ahead and are waiting
• Investor demand has meaningfully pulled back
  
• Higher cap rates, tighter credit, and better risk-free yields (T-bills, money markets) have reduced investor bid support for housing
• This is not a supply glut, it’s an affordability stalemate where sellers are first to react and buyers are still waiting for the math to work

Freight Rates

Drewry World Container Index

China-Global & Shanghai Export Container Freight Index