3Q2025 Global Credit Outlook: Two-sided risks

Key takeaways

• Macro: We expect 3Q2025 will be characterized by a somewhat more challenging growth-inflation mix in the U.S., and key deadlines on trade, taxes, and fiscal policy. Episodes of macro volatility (which are inherently difficult to time) will, in our view, likely remain a prominent feature of the investing landscape. That said, we are attuned to the opportunity cost of being too defensive in this environment and are navigating two-sided risks. Watch the feedback loop between corporate margins, the labor market, and consumer spending.
• Liquid credit: The all-in yield opportunity in credit is attractive, despite tight spreads. We are comfortable selectively moving down in credit quality, given a mix of macro, fundamental, and technical factors. Focus on ‘back to basics’ credit analysis.
• Private credit: Episodic market volatility may act as a tailwind in further broadening the addressable market of borrowers accessing private credit for financing and certainty of execution. This would add to the other multi-faceted growth drivers behind private credit, including the structural shifts in public debt and equity markets.
• Commercial real estate (CRE): ‘Amend and extend’ activity over the past several quarters has resulted in steep near-term maturity walls, which will be important to monitor. Increased acceptance of structurally higher interest rates should support additional stabilization in CRE values, but the theme of dispersion remains intact.
• Risks to our view: Upside: stronger-than-expected growth, which would support corporate margins. Downside: weaker-than-expected growth and a prolonged wave of inflationary pressures.

Past commentary

• 2Q2025
• 1Q2025
• 4Q2024