U.S. News

• Consumer Price Index

• • • The consumer price index increased a seasonally adjusted 4% in December, higher than the forecasted 0.3%. The 12-month inflation rate was 2.9%, higher than the forecasted 2.8%
    • The cost of food increased 0.3% last month, driven by prices for flour, pork, and eggs. The cost of energy increased by 2.6% because of oil prices
    • The core rate increased a more modest 0.2%, mostly due to flattening shelter costs (rent, housing, and hotels)

• Producer Price Index

• • • Wholesale prices increased by 0.2% in December, lower than the forecasted 0.4%
    • Wholesale prices rose by 3.3% in the 12-month period, up from 3.0% in the 12-month period ended November. Analysts predict that higher-than-expected inflation over the last several months of 2024 will likely delay interest rate cuts
    • The core rate of wholesale inflation increased by 0.1% in December, and the 12-month rate dropped from 3.5% to 3.3%

• Retail Sales

• • • Retail sales increased by a seasonally adjusted 0.4% in December, below the forecasted 0.5%. According to the Federal Reserve, most parts of the country reported “strong holiday sales that exceeded expectations”
    • Auto sales grew for the fourth month in a row. Sales of new cars and trucks rose 0.7%
    • The November increase in retail sales was adjusted to 0.8%, up from the original 0.7% estimate. In 2024, retail sales increased almost 4%

• Jobless Claims

• • • Initial jobless claims, a measure of how many workers were laid off across the U.S., increased to 217,000 in the week ended January 10, up 14,000 from the prior week.
    • The four-week moving average was 212,750, down 750 from the prior week.
    • Continuing claims – those filed by workers unemployed for longer than a week – decreased by 18,000 to 1.859 million in the week ended January 3. This figure is reported with a one-week lag.

• Fed’s Balance Sheet

• • • The Federal Reserve’s assets totaled $6.834 trillion in the week ended January 17, down $19.5 billion from the prior week.
    • Treasury holdings totaled $4.289 trillion, down $2.4 billion from the prior week.
    • Holdings of mortgage-backed securities (MBS) were $2.23 trillion in the week, down $0.0 billion from the prior week.

• Total Public Debt

• • • Total public debt outstanding was $36.17 trillion as of January 17, an increase of 6.2% from the previous year.
    • Debt held by the public was $28.85 trillion, and intragovernmental holdings were $7.38 trillion.

• Inflation Factors

• CPI:

• • • • The consumer-price index rose 2.9% in December year over year.
      • On a monthly basis, the CPI increased 0.4% in December on a seasonally adjusted basis, after increasing 0.3% in November.
      • The index for all items less food and energy (core CPI) rose 0.2% in December, after rising 0.3% in November.
      • Core CPI increased 3.2% for the 12 months ending December.

• Food & Beverages:

• • • • The food at home index increased 1.8% in December from the same month a year earlier, and increased 0.3% in December month over month.
      • The food away from home index increased 3.6% in December from the same month a year earlier, and increasing 0.3% in December month over month.

• Commodities:

• • • • The energy commodities index increased 4.3% in December after increasing 0.5% in
      • The energy commodities index fell (3.8%) over the last 12 months.
      • The energy services index rose 0.8% in December after decreasing (0.5%) in November.
      • The energy services index rose 3.3% over the last 12 months.
      • The gasoline index fell (3.4%) over the last 12 months.
      • The fuel oil index fell (13.1%) over the last 12 months.
      • The index for electricity rose 2.8% over the last 12 months.
      • The index for natural gas rose 4.9% over the last 12 months.

• Supply Chain:

• • • • Drewry’s composite World Container Index decreased to $3,854.95 per 40ft container
      • Drewry’s composite World Container Index has increased by 2.1% over the last 12 months.

• Housing Market:

• • • • The shelter index increased 0.3% in December after increasing 0.3% in November.
      • The rent index increased 0.3% in December after increasing 0.3% in November.
      • The index for lodging away from home decreased (2.1%) in December after decreasing (1.0%) in November.

• Federal Funds Rate

• • • The effective Federal Funds Rate is at 4.33%, flat 0.00% year to date.

World News

• Middle East

• • • A ceasefire between Israel and Hamas came into effect on Sunday. The truce pauses one of the deadliest conflicts in modern Middle East history, killing 46,000 Palestinians
    • The multistage deal involves the gradual release of hostages held in Gaza in exchange for Palestinian prisoners held in Israeli jails. The ceasefire was delayed by a few hours due to Hamas’s failure to provide the names of the hostages it planned to release
    • While most Israelis support a ceasefire for the release of hostages, many in Prime Minister Netanyahu’s coalition government oppose a deal that would end the fighting long-term. Further heightening the political pressure, Hamas used the ceasefire to announce victory, claiming the war failed to unseat Hamas as the political and military power in Gaza
    • Talks for a longer-term resolution to the conflict are yet to occur, and the path forward is still unclear. As recently as Sunday, Israeli Foreign Minister Gideon Sa’ar said that the end of the war will depend on Hamas abdicating power in later stages of negotiations, a condition that Hamas is unlikely to easily accept

• Europe

• • • The European Union and Mexico agreed to a new trade deal. The two will reduce tariffs on food products and expand EU exports in financial services and e-commerce. Under the new trade deal, EU companies will have access to Mexican government contracts and vice versa
    • The strengthening of economic ties between the two trade partners comes as President-elect Donald Trump threatens steep tariffs against both. The agreement aims to secure supply chains and raw materials as both the EU and Mexico face uncertainty around US trade policy
    • The European Union accused China of discriminating against European medical devices, threatening retaliation if the complaints are not addressed. According to the EU, China favors domestic suppliers and restricts the procurement of imported devices, leaving European companies at a disadvantage
    • The accusation comes after a monthslong investigation, marking the first time the EU has launched a probe through its new International Procurement Instrument, which is meant to address unfair foreign procurement practices

• China

• • • The Biden administration sanctioned Sichuan Juxinhe Network Technology Co., a Chinese company allegedly responsible for the telecommunications cyberattack that intercepted phone records of U.S. government officials and President-elect Donald Trump. U.S. officials said the espionage campaign was conducted on behalf of the Chinese government
    • The US Treasury department also announced sanctions against a Shanghai-based hacker Yin Kecheng, who is accused of illegally accessing unclassified files on compromised Treasury Department computers, including Secretary Janet Yellen’s
    • President-elect Donald Trump and Xi Jinping spoke by phone on Friday to discuss trade, fentanyl, and the Tik Tok ban, among other subjects. Trump announced on social media that he foresees a productive relationship with China once he enters office. Further, Trump told advisors that he wants to travel to China within 100 days after taking office
    • China’s population declined in 2024 for the third straight year. Demographers believe this trend is not likely to reverse without intense intervention, despite a short-term boost in births caused by the Year of the Dragon

• South Korea

• • • Police arrested the impeached South Korean President Yoon Suk Yeol. This was the second attempt by authorities to detain him; during the first attempt, 200 members of Yoon Suk Yeol’s security team repelled authorities’ efforts

• Canada

• • • Prime Minister Justin Trudeau announced that he will not seek reelection. Chrystia Freeland, a former deputy prime minister and finance minister, and Mark Carney, former Bank of Canada and Bank of England governor, are campaigning against one another to replace Justin Trudeau as the leader of Canada’s Liberal Party. The two are close friends; Carney is the godfather to Freeland’s son

• Sudan

• • • The U.S. has sanctioned Sudan’s de facto president, Lieutenant General Abdel Fattah al-Burhan, as punishment for his handling of the country’s devastating civil war. The decision comes one week after the Biden administration accused Burhan’s rival, Mohamed Hamdan Dagalo, of committing genocide by targeting Black Sudanese in the Darfur region

• U.K.

• • • Yields on U.K. government debt surged to their highest levels since 1998, while the British pound fell against the dollar, driven by concerns over rising government borrowing, weak demand for gilts, and a sluggish economy, with investors fearing that further borrowing could strain public finances

• Japan

• • • The Biden administration’s decision to block Nippon Steel’s acquisition of U.S. Steel on national-security grounds has strained U.S.- Japan relations, risking a chilling effect on Japanese investment in the U.S. and undermining cooperation against China, despite the deep economic ties and progress in market reforms between the two countries

• Germany

• • • Germany’s adjusted unemployment rate remained steady at 6.1% in December 2024, despite ongoing job loss threats from major manufacturing companies like Thyssenkrupp, Bosch, and Schaeffler

• Ghana

• • • A fire destroyed two-thirds of Accra’s Kantamanto secondhand clothing market, affecting around 8,000 people and causing significant economic losses for thousands of traders

• India

• • Former Indian Prime Minister Manmohan Singh, an economist who enacted market reforms and helped open India’s economy, died at 92

Commodities

• Oil Prices

• • • WTI: $77.99 per barrel
      • 1.85% WoW; 8.74% YTD; 7.48% YoY
    • Brent: $80.77 per barrel
      • 1.27% WoW; 8.21% YTD; 3.71% YoY

• US Production

• • • U.S. oil production amounted to 13.5 million bpd for the week ended January 10, down 0.1 million bpd from the prior week.

• Rig Count

• • • The total number of oil rigs amounted to 580, down 4 from last week.

• Inventories

• • • Crude Oil

      • Total U.S. crude oil inventories now amount to 412.7 million barrels, down (4.0%) YoY.
      • Refiners operated at a capacity utilization rate of 91.7% for the week, down from 93.3% in the prior week.
      • U.S. crude oil imports now amount to 6.428 million barrels per day, down (17.5%) YoY.

    • Gasoline

      • Retail average regular gasoline prices amounted to $3.12 per gallon in the week of January 17, up 0.9% YoY.
      • Gasoline prices on the East Coast amounted to $3.11, down (1.2%) YoY.
      • Gasoline prices in the Midwest amounted to $2.98, up 2.8% YoY.
      • Gasoline prices on the Gulf Coast amounted to $2.76, up 0.0% YoY.
      • Gasoline prices in the Rocky Mountain region amounted to $3.00, up 5.3% YoY.
      • Gasoline prices on the West Coast amounted to $3.95, down (3.8%) YoY.
      • Motor gasoline inventories were up by 5.9 million barrels from the prior week.
      • Motor gasoline inventories amounted to 243.6 million barrels, down (1.8%) YoY.
      • Production of motor gasoline averaged 9.28 million bpd, down (0.9%) YoY.
      • Demand for motor gasoline amounted to 8.325 million bpd, up 0.7% YoY.

    • Distillates

      • Distillate inventories decreased by 3.1 million in the week of January 17.
      • Total distillate inventories amounted to 132.0 million barrels, down (2.0%) YoY.
      • Distillate production averaged 5.183 million bpd, up 5.7% YoY.
      • Demand for distillates averaged 3.839 million bpd in the week, up 5.3% YoY.

• Natural Gas

• • • Natural gas inventories decreased by 258 billion cubic feet last week.
    • Total natural gas inventories now amount to 3,115 billion cubic feet, down (2.1%) YoY.

Credit News

High yield bond yields decreased 24bps to 7.24% and spreads decreased 8bps to 287bps. Leveraged loan yields decreased 13bps to 8.83% and spreads increased 1bps to 473bps. WTD Leveraged loan returns were positive 13bps. WTD high yield bond returns were positive 86bps. The 10-year Treasury yield decreased 7bps to 4.61%. HY bond yields dropped as stocks and Treasuries rose, driven by easing inflation and strong bank earnings. Leveraged loan prices consolidated, and capital market activity ramped up with the bulk of proceeds continuing to be directed to repricing and refinancing.

High-yield:

Week ended 01/17/2025

• Yields & Spreads¹
  
• Pricing & Returns¹
  
• Fund Flows²
  
• New Issue²
  
• Distressed Level (trading in excess of 1,000 bps)²
  
• Total HY Defaults
  

¹ Source: Credit Suisse High Yield and Leveraged Loan Index
² Source: JP Morgan

Leveraged loans:

Week ended 01/17/2025

• Yields & Spreads¹
  
• Leveraged Loan Index¹
  
• Fund Flows²
  
• New Issue²
  
• Distressed Level (loan price below $80)¹
  
• Total Loan Defaults
  

Default activity:

• Most recent defaults include: The Container Store ($163mn, 12/22/2024), Party City ($264mn, 12/21/2024), Hearthside Food Solutions ($2.6bn, 11/22/24), Spirit Airlines ($1.1bn, 11/18/24), Franchise Group Inc ($1.1bn, 11/3/24), Exactech ($254mn, 10/29/24), American Tire Distributors ($975mn, 10/23/24), and Accuride ($291mn, 10/11/2024).

CLOs:

Week ended 01/17/2025

• New U.S. CLO Issuance²
  
• New U.S. CLO Issuance²
  

Note:High-yield and leveraged loan yields and spreads are swap-adjusted

¹ Source: Credit Suisse High Yield and Leveraged Loan Index
² Source: JP Morgan

Ratings activity:

• S&P and Moody’s High Yield Ratings
  

Appendix:

Diagram A: Leveraged Loan Trading Levels

Source: Credit Suisse Leveraged Loan Index

Diagram B: High Yield and Leveraged Loan LTM Price

Diagram C: Leveraged Loan and High Yield Returns

Diagram J: Leveraged Loan Defaults by Sector – Full Year

Diagram L: CLO Economics

Diagram N: Developed Country GovBond Yields (%)

Diagram O: S&P 500 Historical Multiples

Diagram P: U.S. Middle-Market M&A Valuations (EV/EBITDA)

Diagram Q: U.S. Large Cap M&A Valuations (EV/EBITDA

Diagram R: Dry Powder for All Private Equity Buyouts

Diagram S: Structured Credit Spreads

Diagram T: Structured Credit Yield

Diagram U: SOFR CURVE

Diagram V: CMBS Spreads

Freight Rates

Drewry World Container Index

China-Global & Shanghai Export Container Freight Index