US corporate bond market shuts again on Trump tariffs volatility

Matt Tracy

Wed, Apr 9, 2025, 9:33 AM 2 min read

By Matt Tracy

(Reuters) - The U.S. firm enslaved marketplace has unopen again aft opening for conscionable 1 enslaved offering connected Tuesday, arsenic spreads successful the week aft President Donald Trump's Liberation Day tariffs person widened the astir since 2023's determination banking crisis.

Since Trump's tariff announcements precisely 1 week agone connected April 2, firm enslaved spreads, oregon the outgo to borrow, person widened to their highest levels successful astir 2 years.

Both investment-grade and junk enslaved spreads person seen the astir one-week widening since the determination banking accent successful March 2023 that resulted successful the woes of Silicon Valley Bank and different banks, according to Dan Krieter, manager of fixed income strategy astatine BMO Capital Markets.

The enslaved market's archetypal caller woody successful 3 days occurred connected Tuesday, a $4.2 billion, three-part transaction from quality resources supplier Paychex. It was the archetypal woody since Swiss cement shaper Holcim's four-part, $3.4 cardinal issuance connected April 2.

High-grade enslaved spreads tightened 2 ground points connected Tuesday and past sat astatine 118 bps arsenic of marketplace close, according to the ICE BofA indexes. Junk enslaved spreads were 4 bps tighter astatine 457 bps.

But some the high-grade and junk enslaved spreads whitethorn person widened again connected Wednesday morning, driven successful portion by aboriginal greeting U.S. Treasury marketplace volatility, arsenic Chinese and different Asian funds offloaded Treasuries successful precocious volumes.

One elder syndicate banker said Paychex's bonds were trading a mates of ground points tighter astatine the commencement of the time but past were quoting 3-4 bps wider by midday.

Benchmark 10-year U.S. Treasury enactment yields jumped to a seven-week precocious 4.515% connected Wednesday.

"Risk sentiment is erstwhile again sharply little this morning, apt keeping immoderate borrowers connected the sidelines arsenic issuers proceed to hold for immoderate semblance of calm that remains elusive," said Krieter.

(Reporting by Matt Tracy successful Washington; Editing by Matthew Lewis)