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Weekly Market Summary
May 27 to May 30, 2025
Extra Credit*
- Portfolio trading volumes hit record volumes in 2024 and 2025 on both sides of the Atlantic. In the U.S., there was a new portfolio trade every seven minutes, and in Europe it was one every 20 minutes. Total annual volumes were around $1 trillion in the U.S. and €250 billion in Europe in 2024—about twice as high as in 2023 in both markets.
- This trend has transformed the corporate-bond market in the U.S. and is starting to shape market structure in Europe, too. While both liquid and illiquid bonds have benefited, the impact has been more pronounced for illiquid bonds, which have lower trading volumes and are costlier to execute outside of portfolio trades.
- Two years ago, portfolio trading shares for liquid and illiquid bonds were similar, but they have since diverged. Illiquid bonds now generate 25% of their volumes through portfolio trades, compared to 20% for liquid bonds. In addition, the number of bonds relying on portfolio trading for the majority of their trading has increased from 2% to 17% over the past two years.
- Bank-loan and high-yield bond default rates, excluding distressed exchanges, finished the month at 1.23% and 0.31%, down from 1.24% and up from 0.27% in February. This is also well below the long-term historical default rate of 3.1% for loans and 3.4% for high yield, and the historical post-GFC default rates of 2.3% and 2.5%, respectively.
Sources: Bloomberg and JP Morgan as of 5/27/25.
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.
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