FICC Focus FICC Focus Special: Panel Discusses Investment Grade Outlook
Dec 19, 2025
Meghan Graper, Global Head of Debt Capital Markets at Barclays, explains how yields and market technicals influence investment grade spreads. Amanda Lynam, from BlackRock, discusses the credit spread outlook amidst tight conditions and potential volatility. Krishna Memani, CIO at Lafayette College, shares contrarian views on macro risks and sector-specific opportunities. The panel debates AI capital expenditures and the challenges of financing ambitious plans while guarding against inflation and labor market risks.
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Tight Spreads Leave Little Margin For Error
- Credit spreads are already near tight historical levels, so there is little room for sustained widening absent a sharp growth downturn.
- Expect episodic volatility in 2026, but technicals and yield-based demand make large, lasting spread widenings unlikely.
Yields Anchor Demand While Supply Is The Wild Card
- Barclays projects investment grade spreads to trade roughly in a 75–125bps range with modest year-end widening to ~90–95bps.
- Yield levels will anchor buyer demand, making issuance the main wild card for spread direction.
Low Vols Support Tight Spreads — Growth Is The Risk
- Market volatility metrics (rate, spread, equity vol) are low, supporting narrow spreads unless growth accelerates sharply.
- Faster growth raises policy error risk and could increase volatility, threatening current spread stability.