Weekly Market Summary

Extra Credit^*

• Credit spreads are slightly wider in what remains a mixed backdrop. Even with stronger than expected issuance and a steady flow of macro and company specific headlines, spreads have been resilient and supported by solid demand. Investment grade index OAS stands at 75 bp (+2 bp week over week, -1 bp month over month), while high yield OAS is 263 bp (flat week over week, +6 bp month over month).
• Economic signals remain uneven. Softer consumer spending data has been counterbalanced by renewed strength in labor markets. Among small businesses, sentiment is similarly divided. The NFIB (National Federation of Independent Business) survey points to healthy sales expectations, but capital expenditure intentions have fallen to their lowest levels since the Global Financial Crisis, and hiring plans have moderated.
• At the sector level, AI continues to drive relative value moves within credit indices. Hyperscalers’ capex has surprised to the upside. This is positive for growth but also indicates rising financing needs, even though free cash flow generation remains strong for most issuers. AI innovation is also weighing on sectors that are likely to be disrupted. What began with software is now extending into areas such as financial data and analytics providers, as well as media and advertising.
• Demand remains strong, aggregate credit fundamentals are solid, and investors continue to move down the risk spectrum when incremental yield is available. The main risks lie in seasonal technical pressures and in a potential pickup in risk taking behavior accompanied by weakening capital and investment discipline, which is often seen at this stage of the credit cycle.

Morningstar as of 2/18/2026.