Recent Rates Volatility: Risks and Opportunities in Credit

Apollo

Research

25 Pages

Apollo’s Torsten Slok and Shobhit Gupta examine why Treasury yields are climbing across the curve, pointing to strong growth, sticky inflation and rising deficits. They cover softer demand at Treasury auctions, a buyer base growing more rate sensitive and credit spreads that remain tight even as total yields look attractive, plus how AI financing needs may push borrowers toward private markets.

Key Takeaways

Tight Credit Spreads: High yield spreads sit near 76 basis points, well below their 10-year average of 115 basis points.
Hyperscaler Debt Issuance: Hyperscalers have issued about $248 billion of investment grade debt in 2026, more than the prior decade combined.
Fed Expectations Flipped: Markets went from pricing four Fed rate cuts to pricing two hikes as growth and inflation held up.

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