Goldman Sachs Global Credit Trader: The Elusive Summer Slowdown
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Goldman Sachs raised its 2026 U.S. dollar investment-grade gross issuance forecast to $2.3 trillion from $2.1 trillion, with $2.4 trillion expected in 2027, as the usual summer slowdown failed to materialize. Rates remain the key driver of total returns: year-to-date USD and EUR IG returns are negative while USD and EUR HY have returned 2.5% and 1.9%, with spreads only modestly wider—weakness stems mainly from rising Treasury and Bund yields. If the rates team's year-end targets of 4.4% for the 10-year Treasury and 3.0% for the 10-year Bund are met, full-year total returns would reach 3.5% (USD IG), 5.1% (USD HY), 2.7% (EUR IG) and 3.9% (EUR HY); unchanged rates would cut IG returns to 1.0% and 0.8%, with HY cushioned by carry at 3.3% and 2.6%. EUR IG has outperformed in spread since June on supply technicals: AI-related issuers account for roughly 24% of 2026 USD IG supply, with dollar issuance up 30% y/y near record levels, versus only 6% of EUR IG supply, where total issuance rose just 2%. Excluding AI issuers, the performance gap narrows markedly. As hyperscalers increasingly tap euro markets and with Strait of Hormuz shipping and European gas risks, the euro IG versus dollar IG balance looks more even from here. No ratings or price targets are provided.
Key exhibits
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