Still Special?

Summary

• The U.S. maintains exceptional growth, innovation, and financial market dominance despite emerging economic challenges.
• U.S. assets form the core of most global portfolios, though global diversification remains valuable for asset allocation.
• The U.S. possesses the deepest & most liquid capital markets globally, particularly in the sub-investment grade credit space.
• Investors should consider opportunities in Europe & Asia to identify assets offering the best risk/reward balance.
• A potential diminishment of U.S. advantages would likely impact equities more severely than credit.
• The S&P 500 trades at record-high levels with a price/earnings ratio of 23, significantly above long-term averages.
• The Magnificent Seven companies comprise over 30% of the S&P 500 index.
• The U.S. dollar remains the undisputed global reserve currency, involved in 88% of foreign exchange transactions.
• The U.S. dollar constitutes approximately 60% of global foreign exchange reserves.
• The U.S. dollar experienced its worst first half of the year since 1973.
• The U.S. economy faces a stretched low-income consumer base & a bifurcation between wealthy individuals & inflation-pressured regular consumers.
• The U.S. recorded a $1.8 trillion budget deficit in 2024.
• Global competition is increasing as other nations modernize & attempt to catch up with American technological superiority.
• The U.S. high yield bond & senior loan markets combine to nearly $3 trillion.
• The U.S. high yield bond market is approximately triple the size of the European market.
• European GDP is $29.2 trillion compared to the U.S. GDP of $23.0 trillion.
• European direct lending volume reached over €22 billion in the first half of 2025.
• Sub-investment grade credit issuance accelerated after a tariff-induced pause in April.
• European loan issuance reached €17.4 billion in June, the highest level since March 2021.
• New CLO issuance totaled $125 billion in the U.S. & nearly €40 billion in Europe this year.
• High yield bond spreads widened from below 300 basis points to nearly 500 basis points in April.
• The U.S. high yield market is now over 50% BB-rated.
• Investment grade credit returns were 1.8% in the second quarter of 2025.
• Investment grade credit issuance totaled $383.0 billion in the second quarter of 2025.
• U.S. high yield bond returns were 3.6% in the second quarter of 2025.
• U.S. high yield bond issuance totaled $77.3 billion in the second quarter of 2025.
• U.S. senior loan returns were 2.3% in the second quarter of 2025.
• U.S. senior loan issuance totaled $103.9 billion in the second quarter of 2025.