The second quarter of 2025 has been remarkable in many ways. No sooner had we clicked ‘send’ on our previous edition, than the world was greeted by Liberation Day. The immediate impact of the tariff shock and associated negativity saw a material weakening in risk assets across the board. Just one week later, ostensibly ‘spooked’ by sharp volatility in the Treasury and equity markets, came the 90-day reprieve on reciprocal tariffs stoking a dramatic recovery in the markets.

The ‘One Big Beautiful Bill Act’ (OBBBA), currently under consideration by the Senate, has been a further source of confusion and nervousness. Aside from the potential impact on the US deficit, the inclusion of Section 899 allowing for taxation of foreign investment remains a concern.

Ongoing geopolitical conflicts, particularly in the Middle East more recently, have only added to the uncertainty. Despite all of the above (and much more we could mention!), credit spreads reside at tighter levels than pre-Liberation Day. Stranger than fiction indeed.

In the following pages, we outline our latest views on credit markets and our outlook going forward.