Bond Bulletin: IG credit’s supply fest and demand frenzy

2026 has opened with elevated investment grade (IG) credit supply, met by consistently strong investor demand. With spreads remaining near historic tights and yield appetite still evident, in this Bond Bulletin we examine the main forces shaping the IG credit market and what to expect in the months ahead.

Implications for Fixed Income Investors

The first week of 2026 has sent a clear signal: investors are seeking yield with a preference for securities lower down the capital structure. We continue to favour high carry, intermediate duration credits, and sectors with clear tailwinds. We maintain an overweight to the banking sector, where profitability and credit metrics are strong, and see room for continued outperformance vs. the overall index. We remain cautious on chemicals, consumer staples, and food & beverage, where spreads do not fully compensate for sector risks.

As the year progresses, we expect IG credit to continue performing, with the US outperforming Europe on the margin. We anticipate positive carry-led outcomes and a market well-positioned to absorb elevated supply while rewarding issuers offering attractive yields.

About the Bond Bulletin

Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.

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