Global Economic & Credit Market Briefing

ISM Services

• The ISM Services PMI slipped to 54.9 in September from 55.4 in August, just below the 55.0 consensus, but stayed in expansion for a 27th straight month. The headline masks a bigger move underneath: Business Activity fell 5.2 points to 56.5 from 61.7, while New Orders eased to a still-strong 59.8
• The bigger signal is pricing. Prices Paid rose to 74.0 from 72.6, above the 72.9 consensus. With ISM Manufacturing Prices Paid also jumping to 77.9, cost pressure is building in both sectors heading into next week's CPI
• The Employment Index moved back into expansion at 50.1 from 47.8. That is a modest positive against the weak +29K September payrolls print, and points to services hiring stabilizing rather than accelerating

FOMC Minutes

• The minutes show all 19 Fed officials backed the September hike to 3.75–4.00%, including the seven non-voters. Underneath the unanimity, officials disagreed on whether the move was precautionary insurance against inflation or needed restraint on strong demand
• The tone was hawkish. Most participants saw another increase as likely appropriate by year-end, and several judged current policy as not restrictive or only mildly restrictive. Officials also flagged the risk that energy costs and the AI investment boom spill over into broader, more persistent inflation
• The minutes are already partly outdated. The debate predates the softer August PCE print and the weak September jobs report, and Fed officials have since signaled no rush to move again. Markets now price only a 20–25% chance of an October hike, and the release drew little market reaction

Consumer Sentiment

• Consumer sentiment fell to 46.3 from 48.1 in September, below the 47.6 consensus and the lowest reading since May. The current conditions gauge hit an all-time low as cost-of-living frustration continued to mount
• The internals diverged. Current conditions dropped to 44.7 from 50.9, while expectations rose to 47.3 from 46.3. Buying conditions for durables plunged on high prices and borrowing costs, and the decline was steepest among lower-income households and those with smaller stock holdings
• Inflation expectations are the part the Fed will focus on. Year-ahead expectations rose to 4.7% from 4.6% and long-run expectations to 3.5% from 3.4%, both the highest since May and well above the 3.4% year-ahead reading in February, before the Iran conflict

Jobless Claims

• Initial jobless claims, a measure of how many workers were laid off across the U.S., decreased to 197,000 in the week ended October 2, down 2,000 from the prior week.
• The four-week moving average was 198,000, down 2,500 from the prior week.
• Continuing claims — those filed by workers unemployed for longer than a week — increased at 1.716 million in the week ended September 25. This figure is reported with a one-week lag.

Fed's Balance Sheet

• The Federal Reserve's assets totaled $6.748 trillion in the week ended October 9, up $4.5 billion from the prior week.
• Treasury holdings totaled $4.565 trillion, up $4.3 billion from the prior week.
• Holdings of mortgage-backed securities (MBS) were $1.90 trillion in the week, down $14.1 billion from the prior week.

Total Public Debt

• Total public debt outstanding was $40.31 trillion as of October 9, an increase of 6.4% from the previous year.
• Debt held by the public was $32.45 trillion, and intragovernmental holdings were $7.75 trillion.

GDP

• The latest annualized U.S. GDP stands at $32.56 trillion as of June 30, 2026, an increase of 2.06% from the previous quarter, & an increase of 6.31% from the previous year.
• The total public debt-to-GDP ratio is at 121.19% as of June 30, an increase of 2.97% from the previous year.

Inflation Factors

CPI:

• The consumer-price index rose 3.4% in August year over year.
• On a monthly basis, the CPI increased 0.4% in August on a seasonally adjusted basis, after increasing 0.1% in July.
• The index for all items less food and energy (core CPI) rose 0.3% in August, after rising 0.2% in July.
• Core CPI increased 2.4% for the 12 months ending August.

Food & Beverages:

• The food at home index increased 2.1% in August from the same month a year earlier, and increased 0.0% in August month over month.
• The food away from home index increased 3.4% in August from the same month a year earlier, and increased 0.3% in August month over month.

Commodities:

• The energy commodities index increased 4.2% in August after decreasing (2.9%) in July.
• The energy commodities index rose 28.0% over the last 12 months.
• The energy services index fell (0.6%) in August after increasing 0.1% in July.
• The energy services index rose 4.0% over the last 12 months.
• The gasoline index rose 27.4% over the last 12 months.
• The fuel oil index rose 52.0% over the last 12 months.
• The index for electricity rose 3.8% over the last 12 months.
• The index for natural gas rose 4.4% over the last 12 months.

Supply Chain:

• Drewry's composite World Container Index decreased to $4,351.25 per 40ft container for the week of October 9.
• Drewry's composite World Container Index has increased by 163.6% over the last 12 months.

Housing Market:

• The shelter index increased 0.3% in August after increasing 0.1% in July.
• The rent index increased 0.3% in August after increasing 0.1% in July.
• The index for lodging away from home increased 0.5% in August after decreasing (3.4%) in July.

Federal Funds Rate

• The effective Federal Funds Rate is at 3.88%, up 0.24% year to date.

Money Market Funds

• Money market fund assets stood at $7.96 trillion as of October 7, 2026, up 0.9% from the previous week, & up 7.8% from the previous year.

Middle East

• Oil settled slightly higher Friday after Trump said the U.S. would not attack Iran before the November midterms, citing "productive discussions" with Tehran. Brent rose 0.4% to $104.72 (+2.4% on the week) and WTI 0.4% to $91.85 (+0.8%). The naval blockade of Iran remains in place, Iran and the Houthis struck Gulf shipping and Saudi Arabia again midweek, and Treasury sanctioned 17 more shadow-fleet tankers
• Goldman estimates Brent's geopolitical risk premium hit $22/bbl in September, the second-highest monthly level on record and above the 2022 Russia-Ukraine peak of $16. Brent's front-month spread remains in about $3 backwardation, a sign of tight near-term supply. Hurricane Isaias added pressure, shutting in nearly 1.5M bbl/day, or 71.5% of Gulf of Mexico output, though the threat to Gulf Coast refineries has eased
• On a military-controlled embed in early October, the WSJ saw Israel fortifying bases along its dividing line with Hamas as its forces dig in across the enclave. Israel says the outposts and flattened buffer zones are needed to reinforce its defenses after the October 7, 2023 attack
• The buildout points to a long-term Israeli military presence in Gaza rather than a withdrawal, adding a third front to a region already strained by the Iran war, the Hormuz blockade and Houthi attacks on Red Sea and Gulf shipping. Journalists still can't enter Gaza independently, so outside visibility into conditions on the ground stays limited

Europe

• The Trump administration imposed sweeping sanctions on the ICC as an institution after the court issued an arrest warrant for Netanyahu. The sanctions could cut the court off from the U.S. financial system and dollar transactions, and since Western banks often avoid sanctioned entities altogether, that could cripple its operations. Rubio urged U.S. allies that are ICC members to rein in the court, which says it will not be deterred
• A grace period runs until April 7 to allow negotiations, and European officials have already begun talks on a deal that would address U.S. demands that the court not target citizens of nonmember states. The EU called the move "deeply regrettable," and Belgium has urged use of the EU blocking statute to stop European banks and businesses from complying. That would set up a new transatlantic legal clash on top of existing trade frictions
• Seven masked thieves stole about 30,000 bottles worth roughly €5M ($5.6M) from a Marchesi Antinori warehouse in Tuscany, using the company's own forklifts to load two trucks with export-ready crates. The haul included about 10,000 bottles each of Solaia, Tignanello and Guado al Tasso from the 2023 vintage, and the Solaia portion equals roughly 20% of that year's production. The bottles were not insured
• The heist adds to a string of high-value luxury thefts across Europe, including last year's $100M+ Louvre crown jewels theft and repeated raids on designer boutiques. Antinori, family-controlled since 1385 and exporting to 170 countries, has warned importers against buying potentially stolen stock as Italian police investigate

China

• Beijing is answering a deepening slowdown with piecemeal measures instead of major stimulus. These include a one-year 1-percentage-point mortgage subsidy for first-time buyers, cheaper funding for infrastructure projects and a $54B capital injection into eight major banks and insurers. Morgan Stanley estimates the mortgage subsidy covers only 16% of transactions, and Barclays called the package "a nudge, not a game changer"
• The pressure is building. Q2 GDP growth slowed to 4.3% YoY, the weakest in over three years and below Beijing's 4.5–5% target, as the property crash enters its sixth year. Growth relies increasingly on exports of AI-related electronics, which leaves China exposed to any cooling in the global AI boom
• The FBI arrested Wanying Zhang, a 34-year-old California realtor, at LAX before she could board a flight to Shanghai. She is charged with acting as an unregistered agent of China. Prosecutors allege she surveilled the Seattle-area family of Taiwan President Lai Ching-te's son under direction from Chinese officials, sending photos, videos and license plate details back to Beijing
• Taipei called the case transnational repression and says Beijing is increasingly targeting Taiwanese individuals, think tanks and NGOs through surveillance and harassment. China's Foreign Ministry dismissed the allegations. The case follows a four-year sentence earlier this year for a man who spied on then-President Tsai Ing-wen during her 2023 U.S. visit, and adds to U.S.-China friction over Taiwan after the Trump-Xi summit

Americas

• A revised U.S. indictment charges deposed Venezuelan leader Nicolás Maduro and his wife Cilia Flores with conspiring to torture detainees, including Americans, as part of a strategy to hold power through repression. It adds to the narcoterrorism and drug-trafficking charges they already face. The couple was seized by U.S. Special Forces in Caracas earlier this year, is held in Brooklyn, has pleaded not guilty, and goes to trial in June. A judge denied Flores bail this week
• The case keeps Washington's backing of interim leader Delcy Rodríguez in focus, as investors weigh Venezuela's oil reopening, including Chevron's $7B commitment, against an unresolved election timeline. Escalating charges against Maduro also make any negotiated return of the old regime less likely, which reinforces the current U.S.-aligned political setup
• U.S. Treasury sanctions on 21 individuals linked to the Sinaloa cartel included the ex-husband of Baja California's Morena governor, accused of taking bribes to protect cartel operations at the Tijuana and Mexicali border crossings. Sheinbaum privately told her security chiefs the measures were meant to destabilize her government, but agreed to freeze the accounts to avoid a rupture with Washington
• Her tone is hardening publicly as well. She is rallying supporters against U.S. interference, refusing to extradite indicted former Sinaloa Governor Rubén Rocha, and criticizing earlier Treasury sanctions on three Mexican financial institutions. With corruption allegations multiplying inside Morena, cooling U.S.-Mexico security cooperation adds another source of friction to North American trade relations already strained by the Canada tariff fight

Russia

• The WHO has asked Moscow for more information after a 28-year-old worker at a Siberian plague research institute in Irkutsk died of what Russia calls "pneumonia of unknown cause," amid reports that a second employee has fallen ill. Kazakhstan has imposed temperature checks at the border and Kyrgyzstan and Uzbekistan have stepped up airport screening, while Washington has warned that Russia's lack of disclosure breaches its international health obligations. Experts consider widespread transmission unlikely, since pneumonic plague requires close contact and can be treated with antibiotics

UK

• Counterterrorism police arrested two Latvian men who cut through the perimeter fence of RAF Molesworth, an intelligence hub for U.S. European Command, U.S. Africa Command and NATO. It is the second breach at a U.K. base in weeks, after the foiled plot at RAF Fairford that the U.K. has linked to Iran. Police see no connection to Fairford so far, but U.S. B-1 bombers were already pulled from Fairford over security concerns, which highlights how exposed allied bases in Europe are to Iran-linked threats

India

• About 130 million names have been removed from final or draft voter rolls in a national cleanup that critics call opaque. Software flagged voters for minor misspellings or large families, and new registrants must now prove their parents or grandparents were previously registered. Opposition parties and the youth-led "Cockroach Janta Party" are demanding the chief election commissioner resign, with critics alleging Muslim voters are being targeted, adding to pressure on Modi's government after earlier protests forced out the education minister

Germany

• German factory orders fell 10.6% MoM in August, far worse than the 1.0% decline expected, driven by a 61.5% collapse in large transport orders such as aircraft, ships and military vehicles after July's surge. Excluding large orders, the decline was only 0.1%, but energy-intensive industry faces gas and power prices at their highest since 2022 plus two ECB hikes since the war began. Commerzbank expects industry to have weighed on Q3 growth before government contracts support a Q4 rebound

South Africa

• South African jurist Navi Pillay, who defended Mandela and later served as an ICC judge and UN human rights chief, won the Nobel Peace Prize on the same day Washington announced sweeping sanctions on the ICC. Pillay warned that efforts to weaken international criminal justice risk a world where power, not law, decides outcomes. The timing turns the award into a direct rebuke of U.S. policy and deepens the transatlantic split over the court

Oil Prices

• WTI: $91.72 per barrel
• +0.67% WoW; +22.42% YTD; +46.63% YoY
• Brent: $104.44 per barrel
• +2.14% WoW; +32.96% YTD; +60.13% YoY

U.S. Production

• U.S. oil production amounted to 14.0 million bpd for the week ended October 2, up 0.0 million bpd from the prior week.

Rig Count

• The total number of oil rigs amounted to 603, up 5 from last week.

Inventories

Crude Oil

• Total U.S. crude oil inventories now amount to 424.1 million barrels, up 0.9% YoY.
• Refiners operated at a capacity utilization rate of 92.7% for the week, up from 92.5% in the prior week.
• U.S. crude oil imports now amount to 5.698 million barrels per day, down (6.8%) YoY.

Gasoline

• Retail average regular gasoline prices amounted to $4.37 per gallon in the week of October 9, up 41.0% YoY.
• Gasoline prices on the East Coast amounted to $4.27, up 37.7% YoY.
• Gasoline prices in the Midwest amounted to $4.20, up 39.2% YoY.
• Gasoline prices on the Gulf Coast amounted to $4.01, up 42.4% YoY.
• Gasoline prices in the Rocky Mountain region amounted to $4.55, up 42.5% YoY.
• Gasoline prices on the West Coast amounted to $5.87, up 34.8% YoY.
• Motor gasoline inventories were up by 0.4 million barrels from the prior week.
• Motor gasoline inventories amounted to 204.7 million barrels, down (6.5%) YoY.
• Production of motor gasoline averaged 9.35 million bpd, down (4.1%) YoY.
• Demand for motor gasoline amounted to 8.769 million bpd, down (1.7%) YoY.

Distillates

• Distillate inventories decreased by 0.0 million in the week of October 9.
• Total distillate inventories amounted to 105.1 million barrels, down (13.5%) YoY.
• Distillate production averaged 5.290 million bpd, up 2.3% YoY.
• Demand for distillates averaged 3.650 million bpd in the week, down (16.0%) YoY.

Natural Gas

• Natural gas inventories increased by 85 billion cubic feet last week.
• Total natural gas inventories now amount to 3,500 billion cubic feet, down (3.6%) YoY.

High-yield:

High yield bond yields decreased 12bps to 8.18% and spreads tightened 10bps to 333bps. Leveraged loan yields increased 6bps to 9.61% and spreads increased 7bps to 492bps. WTD high yield bond returns were positive 47bps and WTD leveraged loan returns were negative 8bps. HY spreads tightened alongside easing rate volatility, modest fund inflows, and lighter primary activity. BB and single-B bonds gained, while CCC bonds weakened, showing an uneven recovery. Loans underperformed HY, with pressure on CCC-rated loans and cable, telecom, and housing despite continued inflows into loan funds.

Week ended 10/09/2026

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 10/09/2026

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: Leslie's Poolmart ($757mn, 09/30/2026), Brightline East ($1.1bn, 09/24/2026), Hughes Satellite Systems ($1.5bn, 08/02/2026), Unifrax Investment ($3.1bn, 07/26/2026), Dish DBS ($9.8bn, 06/30/2026), QVC Group ($2.2bn, 04/16/2026), Cumulus Media ($641mn, 03/05/2026), Trinseo ($390mn, 02/17/2026), Beasley Broadcasting Group ($189mn, 02/01/2026), Nine Energy Service ($300mn, 02/01/2026), Multi-Color ($4.5bn, 01/29/2026).

CLOs:

Week ended 10/09/2026

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

Source: Bloomberg

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: New Issue - Leveraged Loan and High Yield

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

Source: JP Morgan Default Monitor

Diagram L: CLO Economics

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

Diagram N: S&P 500 Historical Multiples

Source: S&P Capital IQ

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

Source: Pitchbook

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

Source: Pitchbook

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

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

Diagram S: Structured Credit Spreads

Source: Bloomberg

Diagram T: Structured Credit Yield

Source: Bloomberg

Diagram U: SOFR Curve

Diagram V: CMBS Spreads

Source: Bloomberg