KBRA Releases Research – The Forward Look—U.S. Credit Insights: Q2 2026

NEW YORK--(BUSINESS WIRE)--KBRA releases its quarterly report highlighting our Chief Strategist Van Hesser’s view on key economic indicators, as well as what he identifies as the most influential factors driving credit markets in the upcoming quarter. The report also examines credit market valuations in the context of current and future market conditions.

Key factors driving credit market conditions in Q2 include resilient U.S. economic and corporate earnings growth despite the shocks faced by markets in Q1, including conflict in the Middle East, the disruptive potential of artificial intelligence (AI) in the software sector, and renewed inflationary pressures. KBRA’s base case assumes these developments are not sufficient to trigger a turn in the credit cycle or materially derail the economic outlook.

Looking ahead, we are paying close attention to several factors that could materially impact credit markets. First, inflationary pressures, where progress toward the Federal Reserve’s target has stalled, with pricing pressure coming from underlying economic strength, evolving tariff impacts, fiscal stimulus, and the cumulative effects of prior rate cuts. Second, developments in the Middle East and their impact on energy and fertilizer prices. While markets have largely looked through the disruption so far, persistent commodity price pressure is weighing on more vulnerable consumers and businesses. Third, the resilience of consumer spending as headwinds build, including a softening labor market and the cumulative effects of inflation. Fourth, the promise of AI, which continues to underpin a disproportionate share of economic growth through sustained capital investment and the wealth effect derived from AI-related equities.

While credit spreads have retraced much of the widening observed in Q1, yields remain sufficiently attractive to provide the income and diversification benefits investors seek in this imperfect environment—particularly relative to stocks, which have rebounded sharply from their Q1 sell-off and are once again trading at historically elevated valuations.

Click here to view the report.

Related Publications

• Van Hesser's 3 Things in Credit - A KBRA Podcast
• Gordon Kerr's Credit Compass: Navigating European Credit Markets

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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