U.S. News

• U.S. Leading Economic Indicators

• • • US Leading Economic Index fell 0.3% in Jan to 101.5, reversing Nov-Dec gains. Decline driven by
      pessimistic consumer expectations and fewer manufacturing hours
    • US Coincident Economic Index rose 0.3% in Jan to 114.3, with industrial production, payroll
      employment, personal income, and trade sales all improving
    • LEI’s six-month decline slowed to 0.9% (vs. 1.7% in prior six months), signaling milder economic
      risks and 2.3% projected GDP growth in 2025

• Housing Starts

• • • In Jan, building permits were at a seasonally adjusted annual rate of 1,483,000, a 0.1% increase
      from December but 1.7% lower than January 2024
    • Housing starts in Jan were at a rate of 1,366,000, down 9.8% from December and 0.7% from January 2024
    • Housing completions in January reached 1,651,000, up 7.6% from December and 9.8% from January 2024

• Consumer Sentiment

• • • The consumer sentiment index dropped to 64.7 in February, a nearly 10% decline from January, marking the lowest level since November 2023
    • Americans’ expectations for inflation over the next five to ten years increased to 3.5% from 3.2% in January, the largest month-over-month jump since May 2021
    • January retail sales were weak, raising concerns about consumer spending. Buying conditions for durable goods fell 19%, largely due to fears of tariff-induced price hike

• U.S. Tariff & Trade

• • • In a press conference in Miami on 2/19, President trump said he will be announcing tariffs on multiple goods including pharmaceuticals, automobiles, lumber, semiconductors and more over the next month
    • President Trump and Indian Prime Minister Modi launched the US-India COMPACT committed to initial outcomes and trade related measures this year
    • Trump Administration has scrapped the Americas Partnership for Economic Prosperity, an initiative launched in June 2022 intended to build on the free trade agreements with countries in Latin America
    • President Trump has issued an executive order directing the Department of Justice to pause and reevaluate its enforcement of the Foreign Corrupt Practices Act. Under the FCPCA it is unlawful to make payments to foreign officials to assist in obtaining or retaining business

  Current US Tariffs	Country of Origin	Effective Date	Tariff %	US Imported Goods Impacted
  Sec 301 China Origin Tariffs	China	7/16/2018	7.5% to 25%	Over three thousand codes in all chapters of the US Harmonized Tariff Schedule
  4 Year Review of Sec 301 China Origin Tariffs	China	9/27/2024	25% to 100%	382 imported goods, including electric vehicles, syringes, medical gloves, electric vehicle batteries, semiconductors, and solar cells.
  IEEPA China Tariff	China	2/1/2025	10%	Over three thousand codes in all chapters of the US Harmonized Tariff Schedule
  IEEPA Canada Tariff	Canada	Paused until 3/4/2025	25%	25% on all general Canadian goods; 10% on Canadian energy resources
  IEEPA Mexico Tariff	Mexico	Paused until 3/4/2025	25%	25% on all general Mexican origin goods
  Sec 232 Steel / Aluminum & Derivatives	All Countries	3/12/2025	25%	Steel and aluminum goods, including derivative articles of steel and aluminum

  Potential Actions	Country of Origin	Notes
  Reciprocal Import Tariffs	All Countries	Presidential memorandum on Feb 13th laid the groundwork for imposition of reciprocal tariffs on imports from individual countries with “unfair and unbalanced trade with the US.”
  European Tariff	EU and Other Countries	In an interview President Trump specifically called out EU and other countries having “troubling trade surpluses with the United States”
  Semiconductors	All Countries	President Trump stated tariffs on semiconductor chips would start at “25% or higher” but didn’t clarify when these will come into effect.
  Pharmaceuticals, Automobiles, Lumber	All Countries	During a speech on 2/19, President Trump announces tariffs “over the next month or sooner” for multiple products.

• Jobless Claims

• • • Initial jobless claims, a measure of how many workers were laid off across the U.S., increased
      to 219,000 in the week ended February 14, up 5,000 from the prior week.
    • The four-week moving average was 215,000, down 1000 from the prior week.
    • Continuing claims – those filed by workers unemployed for longer than a week – increased by
      24,000 to 1.869 million in the week ended February 7. This figure is reported with a one-week
      lag.

• Fed’s Balance Sheet

• • • The Federal Reserve’s assets totaled $6.782 trillion in the week ended February 21, dpwn $31.2
      billion from the prior week.
    • Treasury holdings totaled $4.262 trillion, down $4.2 billion from the prior week.
    • Holdings of mortgage-backed securities (MBS) were $2.22 trillion in the week, up $0.1 billion
      from the prior week.

• Total Public Debt

• • • Total public debt outstanding was $36.22 trillion as of February 21, an increase of 5.5% from
      the previous year.
    • Debt held by the public was $28.87 trillion, and intragovernmental holdings were $7.31 trillion.

• Inflation Factors

• CPI:

• • • • The consumer-price index rose 3.0% in January year over year.
      • On a monthly basis, the CPI increased 0.5% in January on a seasonally adjusted basis,
        after increasing 0.4% in December.
      • The index for all items less food and energy (core CPI) rose 0.4% in January, after
        rising 0.2% in December.
      • Core CPI increased 3.3% for the 12 months ending January.

• Food & Beverages:

• • • • The food at home index increased 1.9% in January from the same month a year earlier,
        and increased 0.5% in January month over month.
      • The food away from home index increased 3.4% in January from the same month a year
        earlier, and increased 0.2% in January month over month.

• Commodities:

• • • • The energy commodities index increased 1.9% in January after increasing 3.9% in
      • The energy commodities index fell (0.5%) over the last 12 months.
      • The energy services index rose 1.8% in January after increasing 0.8% in December.
      • The energy services index rose 2.5% over the last 12 months.
      • The gasoline index fell (0.2%) over the last 12 months.
      • The fuel oil index fell (5.3%) over the last 12 months.
      • The index for electricity rose 1.9% over the last 12 months.
      • The index for natural gas rose 4.9% over the last 12 months.

• Supply Chain:

• • • • Drewry’s composite World Container Index decreased to $2,794.84 per 40ft
      • Drewry’s composite World Container Index has decreased by (23.6%) over the last 12
        months.

• Housing Market:

• • • • The shelter index increased 0.4% in January after increasing 0.3% in December.
      • The rent index increased 0.4% in January after increasing 0.3% in December.
      • The index for lodging away from home increased 3.9% in January after decreasing
        (2.1%) in December.

• Federal Funds Rate

• • • The effective Federal Funds Rate is at 4.33%, flat 0.00% year to date.

World News

• Middle East

• • • The Israeli military confirmed that the bodies of Ariel and Kfir Bibas, two young boys taken hostage, had been identified, but the body of their mother, Shiri Bibas, which Hamas claimed to have returned, did not match any known hostage. Hamas stated it was unaware of the mistake and would investigate. Israel called this a severe violation and warned of consequences
    • Steve Witkoff, Trump’s Middle East envoy, and Jared Kushner discussed bringing together global developers and architects to plan the reconstruction of Gaza, which is estimated to cost over $50 billion over the next decade. Egypt is working on a separate framework for rebuilding Gaza, aiming for completion within three years
    • Two bombs exploded on empty buses near Tel Aviv, causing damage but no casualties. Israeli police suspect the explosives came from the West Bank. Hamas did not claim responsibility but hinted at retaliation

• Europe

• • • The eurozone’s composite PMI held steady at 50.2 in February, showing weak economic expansion, with Germany showing signs of recovery while France’s economy sharply declined
    • The Trump administration is pressuring Ukrainian President Zelensky to grant the U.S. mineral rights worth billions after his initial rejection, escalating tensions between the leaders. The White House condemned Zelensky’s refusal and criticism, while Trump called him a dictator
    • Denmark is increasing its annual defense budget by $7 billion over two years, raising military spending to 3.2% of GDP, in response to growing Russian threats and pressure from the Trump administration for European allies to boost defense spending
    • A 19-year-old Syrian refugee stabbed a Spanish tourist in Berlin’s Holocaust Memorial, allegedly intending to kill Jews, amid a series of refugee-related attacks ahead of Germany’s crucial election

• China

• • • China and Russia have conducted over 100 joint military exercises since 2003, with a significant increase since 2017. Recent operations include naval and air drills near Alaska, leading to interceptions by U.S. and Canadian forces. These activities challenge U.S. and allied interests in regions like Japan, South Korea, Taiwan, and the Philippines
    • President Donald Trump has directed the Committee on Foreign Investment in the United States (CFIUS) to limit Chinese investments in critical sectors such as technology, energy, and healthcare. This move aims to prevent foreign adversaries from leveraging American resources to enhance their military and intelligence capabilities
    • Chinese warships have performed live-fire exercises in the Tasman Sea, located between Australia and New Zealand, causing flight diversions due to safety concerns. The unannounced nature of these drills has heightened regional tensions
    • In response to escalating trade tensions with the U.S. and Europe, China has increased its control over advanced technologies and critical minerals. Measures include restricting the movement of engineers and equipment, proposing new export controls on key battery technologies, and limiting technology for processing essential minerals. These actions aim to safeguard China’s technological advancements and maintain its central role in global supply chains

• United Kingdom

• • • Prime Minister Keir Starmer is set to visit Washington, D.C., to discuss defense spending and support for Ukraine with President Donald Trump. This visit comes as the UK government faces pressure to increase defense spending to 2.5% of GDP amid global security concerns

• Argentina

• • • Argentine President Javier Milei faces political backlash after a cryptocurrency he endorsed, $LIBRA, collapsed, wiping out $4 billion. Accused of promoting a scam, Milei denies involvement, calling it a private matter. A federal judge is investigating, while critics demand impeachment. The controversy threatens Milei’s credibility as he seeks U.S. support for economic reforms and an IMF loan

• Australia

• • • Argentine Australia has passed a law banning social media access for under-16s, requiring platforms to implement age verification measures like facial recognition. While many parents and some experts support the move, others argue it may be ineffective, as children can find ways to bypass restrictions, and harmful content could shift to other online spaces

• Thailand

• • • Thailand estimates 30,000–100,000 people, including foreigners from 30+ countries, are trapped in Myanmar scam compounds run by Chinese gangs, forced into global fraud schemes. In response, Thailand cut power, restricted fuel, and is repatriating victims. The crackdown intensified after Chinese actor Wang Xing’s high-profile abduction exposed the region’s human trafficking crisis
  • Mexico
  • • • In response to the U.S. designating six Mexican drug cartels as foreign terrorist organizations, Mexico’s President Claudia Sheinbaum announced plans for constitutional reforms to protect national sovereignty, rejecting any U.S. military intervention while also proposing stricter penalties for foreign involvement in arms trafficking
  • Japan
  • • • Japan’s Trade Minister Yoji Muto plans a U.S. visit in March to seek exemptions from Trump’s proposed 25% tariffs on steel and car imports, highlighting the economic impact on Japan’s auto industry, while also discussing increased U.S. natural gas purchases and Nippon Steel’s stalled bid for U.S. Steel
  • Hong Kong
  • • • Hong Kong’s largest pro-democracy party, the Democratic Party, has taken an initial step toward dissolving, citing the restrictive political climate following Beijing’s crackdown on dissent, the 2020 national security law, and electoral changes that have effectively sidelined pro-democracy voices

  Commodities

  • Oil Prices
  • • • WTI: $70.22 per barrel
        • (0.74%) WoW; (1.84%) YTD; (9.87%) YoY
      • Brent: $74.22 per barrel
        • (0.70%) WoW; (0.51%) YTD; (10.61%) YoY
  • US Production
  • • • U.S. oil production amounted to 13.5 million bpd for the week ended February 14, up 0.0 million
        bpd from the prior week.
  • Rig Count
  • • • The total number of oil rigs amounted to 592, up 4 from last week.
  • Inventories

  • • • Crude Oil

        • Total U.S. crude oil inventories now amount to 432.5 million barrels, down (2.4%) YoY.
        • Refiners operated at a capacity utilization rate of 84.9% for the week, down from 85.0%
          in the prior week.
        • U.S. crude oil imports now amount to 6.309 million barrels per day, down (12.5%) YoY.

      • Gasoline

        • Retail average regular gasoline prices amounted to $3.16 per gallon in the week of
          February 21, down (3.2%) YoY.
        • Gasoline prices on the East Coast amounted to $3.14, down (6.0%) YoY.
        • Gasoline prices in the Midwest amounted to $3.06, down (4.2%) YoY.
        • Gasoline prices on the Gulf Coast amounted to $2.84, down (5.1%) YoY.
        • Gasoline prices in the Rocky Mountain region amounted to $3.17, up 3.9% YoY.
        • Gasoline prices on the West Coast amounted to $4.33, up 3.3%
        • Motor gasoline inventories were down by 0.2 million barrels from the prior week.
        • Motor gasoline inventories amounted to 247.9 million barrels, up 0.4% YoY.
        • Production of motor gasoline averaged 9.19 million bpd, up 1.8% YoY.
        • Demand for motor gasoline amounted to 8.239 million bpd, up 0.5% YoY.

      • Distillates

        • Distillate inventories decreased by -2.1 million in the week of February 21.
        • Total distillate inventories amounted to 116.6 million barrels, down (4.2%) YoY.
        • Distillate production averaged 4.723 million bpd, up 13.2% YoY.
        • Demand for distillates averaged 4.364 million bpd in the week, up 10.8% YoY.
  • Natural Gas
  • • • Natural gas inventories decreased by 196 billion cubic feet last week.
      • Total natural gas inventories now amount to 2,101 billion cubic feet, down (14.9%) YoY.

  

  Credit News

  High yield bond yields decreased 9bps to 7.17% and spreads increased 2bps to 286bps. Leveraged loan yields decreased 12bps to 8.76% and spreads increased 2bps to 472bps. WTD high yield bond returns were positive 41bps and leveraged loan returns were positive 14bps. 10-year Treasury yield decreased 3bps to 4.50%. Spreads widened as investors absorbed earnings, a limited macro calendar, steady inflows, and light capital market activity.

  High-yield:

  Week ended 02/21/2025

  • Yields & Spreads¹
    
  • Pricing & Returns¹
    
  • Fund Flows²
    
  • New Issue²
    
  • Distressed Level (trading in excess of 1,000 bps)²
    
  • Total HY Defaults
    

  ¹ Source: Credit Suisse High Yield and Leveraged Loan Index
  ² Source: JP Morgan

  Leveraged loans:

  Week ended 02/21/2025

  • Yields & Spreads¹
    
  • Leveraged Loan Index¹
    
  • Fund Flows²
    
  • New Issue²
    
  • Distressed Level (loan price below $80)¹
    
  • Total Loan Defaults
    

  Default activity:

  • Most recent defaults include: City Brewing ($886mn, 1/2/2025), The Container Store ($163mn, 12/22/2024), Party City ($264mn, 12/21/2024), Hearthside Food Solutions ($2.6bn, 11/22/24), Spirit Airlines ($1.1bn, 11/18/24), Franchise Group Inc ($1.1bn, 11/3/24), Exactech ($254mn, 10/29/24), American Tire Distributors ($975mn, 10/23/24), and Accuride ($291mn, 10/11/2024).

  CLOs:

  Week ended 02/21/2025

  • New U.S. CLO Issuance²
    
  • New U.S. CLO 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
  
  Source: Credit Suisse Leveraged Loan Index

  Diagram B: High Yield and Leveraged Loan LTM Price
  

  Diagram C: Leveraged Loan and High Yield Returns
  

  
  

  Diagram J: Leveraged Loan Defaults by Sector – Full Year
  

  Diagram L: CLO Economics
  

  Diagram N: Developed Country GovBond Yields (%)
  

  Diagram O: S&P 500 Historical Multiples
  

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

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

  Diagram R: Dry Powder for All Private Equity Buyouts
  

  Diagram S: Structured Credit Spreads
  

  Diagram T: Structured Credit Yield
  

  Diagram U: SOFR CURVE
  

  Diagram V: CMBS Spreads
  
  

  Freight Rates

  Drewry World Container Index
  

  China-Global & Shanghai Export Container Freight Index