U.S. News

• Retail Sales

• • • U.S. retail sales rose just 0.2% in February, falling short of the expected 0.6%, but a 1% jump in the “control group” that feeds directly into GDP suggests the economy may not be as weak as it seems
    • Investors reacted positively to the news, lifting stocks, though overall retail sales for early 2025 indicate a slowdown amid declining consumer confidence and concerns over tariffs
    • While online retailers and pharmacies saw growth, sales at restaurants fell 1.5%, signaling potential economic anxiety

• Housing Starts

• • • U.S. housing starts rose 11.2% in February to a 1.5 million annual pace as builders rebounded from winter disruptions, though economists expect a slowdown in the coming months
    • Building permits fell 1.2%, suggesting that concerns over tariffs, high costs, and affordability may dampen new home construction
    • Despite a persistent housing shortage, builders are becoming more cautious due to rising costs, unsold inventory, and declining consumer confidence, which could further strain affordability in the U.S. housing market

• FOMC Interest-Rate Decision

• • • The Federal Reserve held interest rates steady at 4.25% to 4.5%, citing heightened uncertainty from tariffs, while still projecting two rate cuts in 2025
    • Inflation is now expected to rise to 2.7% by year-end, prompting the Fed to downgrade its GDP growth forecast to 1.7%, a sharp drop from previous years, as trade war fears loom
    • Economists are skeptical of the Fed’s mixed signals, with some warning that worsening inflation, weaker consumer spending, and a slowing labor market could force the Fed into “bad-news cuts” later in the year

• U.S. Tariff & Trade

• • • President Trump reiterated his plan for April 2 to mark the beginning of a new wave of tariffs, telling reporters it will be a “liberating day for our country,” while sources close to the plan have suggested that the USTR is likely to create a formula for a uniform tariff rate for each country, based on their average tariff level
    • President Trump expressed his belief that India will likely reduce tariffs imposed on American goods. He indicated that if these tariffs are not lowered by April 2, the United States will begin charging India equivalent tariffs
    • The EU has postponed implementing its initial retaliatory tariffs against the U.S. until mid-April. These countermeasures, valued at approximately $28 billion, include a 50% tariff on American whiskey
    • Brazil has stated its intentions to eliminate import tariffs on basic food items including  meat (current import tariff is 10.8%), coffee (9%), sugar (14%), corn (7.2%), olive oil (9%), sunflower oil (9%), sardines (32%), biscuits (16.2%), and pasta (14.4%).”

  Target Country	Potential Tariff Action	Notes
  All Countries	Reciprocal Tariffs	Expected to be implemented April 2nd on imports from countries engaged in “unfair and unbalanced trade with the U.S.”
  All Countries	Semiconductors	President Trump stated tariffs on semiconductor chips would begin at “25% or higher” though no specific implementation date has been provided
  All Countries	Pharmaceuticals, Automobiles, Lumber, Copper	During a speech on February 19th, President Trump stated that tariffs on these products would be introduced “over the next month or sooner”
  All Countries	Retaliatory Tariffs	The Trump administration plans to impose tariffs or other measures against any foreign government that enforces a “fine, penalty, tax, or other burden” deemed discriminatory, disproportionate, or intended to extract substantial funds or intellectual property from American companies.
  All Countries	Agricultural Products	On March 3, 2025, President Trump announced that new tariffs on imported agricultural products will take effect on April 2, 2025. He urged American farmers to increase domestic production in anticipation of these measures.
  European Union	Alcoholic Beverages	President Trump threatened to impose a 200% tariff on European alcoholic beverages, including wine and cognac, unless EU retracts its 50% tariff on U.S. whiskey imports

  
  

  Target Country	Current US Tariffs	Goods Targeted	Effective Date	Tariff %
  China	Sec 301 China Origin Tariffs	Most goods	7/16/2018	Most goods are subject to total tariff ranging from 27.5% to 45%, with select goods facing tariffs as high as 100%
  	4 Year Review of Sec 301	A select number of goods such as electric vehicles, batteries, syringes, medical gloves, and solar cells	9/27/2024
  	IEEPA China Tariff	All goods of Chinese origin	2/1/2025
  Canada	IEEPA Canada Tariff	All goods, except USMCA qualifying goods	3/4/2025	25%, except for Canadian energy products, which are subject to a 10% tariff
  Mexico	IEEPA Mexico Tariff	All goods, except USMCA qualifying goods	3/4/2025	25%
  All Countries	Sec 232 Steel / Aluminum & Derivatives	Steel, aluminum, and certain derivatives of steel and aluminum	3/12/2025	25%

• Jobless Claims

• • • Initial jobless claims, a measure of how many workers were laid off across the U.S., increased to 223,000 in the week ended March 14, up 2,000 from the prior week.
    • The four-week moving average was 227,000, up 750 from the prior week.
    • Continuing claims – those filed by workers unemployed for longer than a week – increased by 33,000 to 1.892 million in the week ended March 7. This figure is reported with a one-week lag.

• Fed’s Balance Sheet

• • • The Federal Reserves assets totaled $6.756 trillion in the week ended March 21, down $3.6 billion from the prior week.
    • Treasury holdings totaled $4.240 trillion, down $2.0 billion from the prior week.
    • Holdings of mortgage-backed securities (MBS) were $2.20 trillion in the week, down $0.0 billion from the prior week.

• Total Public Debt

• • • Total public debt outstanding was $36.22 trillion as of March 21, an increase of 4.7% from the previous year.
    • Debt held by the public was $28.93 trillion, and intragovernmental holdings were $7.30 trillion.

• GDP

• • • The latest annualized U.S GDP stands at $29.72 trillion as of December 31, an increase of 5.03% from the previous year
    • The total public debt-to-GDP ratio is at 121.87% as of December 31, an increase of 1.71% from the previous year

• Inflation Factors

• CPI:

• • • • The consumer-price index rose 2.8% in February year over year.
      • On a monthly basis, the CPI increased 0.2% in February on a seasonally adjusted basis, after increasing 0.5% in January.
      • The index for all items less food and energy (core CPI) rose 0.2% in February, after rising 0.4% in January.
      • Core CPI increased 3.1% for the 12 months ending February.

• Food & Beverages:

• • • • The food at home index increased 1.8% in February from the same month a year earlier, and increased 0.0% in February month over month.
      • The food away from home index increased 3.7% in February from the same month a year earlier, and increased 0.4% in February month over month.

• Commodities:

• • • • The energy commodities index decreased (0.9%) in February after increasing
      • The energy commodities index fell (3.2%) over the last 12 months.
      • The energy services index rose 0.8% in February after increasing 1.8% in January.
      • The energy services index rose 3.3% over the last 12 months.
      • The gasoline index fell (3.1%) over the last 12 months.
      • The fuel oil index fell (5.1%) over the last 12 months.
      • The index for electricity rose 2.5% over the last 12 months.
      • The index for natural gas rose 6.0% over the last 12 months.

• Supply Chain:

• • • • Drewry’s composite World Container Index decreased to $2,263.90 per 40ft
      • Drewry’s composite World Container Index has decreased by (24.8%) over the last 12 months.

• Housing Market:

• • • • The shelter index increased 0.3% in February after increasing 0.4% in January.
      • The rent index increased 0.2% in February after increasing 0.4% in January.
      • The index for lodging away from home increased 2.9% in February after increasing 3.9% in January.

• Federal Funds Rate

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

World News

• Middle East

• • • Israeli Prime Minister Benjamin Netanyahu dismissed Shin Bet Director Ronen Bar, consolidating his control over security agencies amid ongoing hostilities in Gaza, despite protests and legal objections
    • The move has deepened divisions in Israeli society, sparking mass demonstrations against Netanyahu’s government, while Netanyahu’s administration argues Bar’s removal is necessary due to a lack of confidence in his leadership
    • The U.S. Treasury Department imposed new sanctions on Iran’s oil trade, targeting China’s Shandong Shouguang Luqing Petrochemical Co. and 19 entities and vessels linked to Iranian crude shipments
    • The crackdown, part of the U.S. “maximum pressure” campaign on Iran, lifted oil prices, with sanctions aimed at cutting off a key economic lifeline for Iran

• Europe

• • • Germany approved a historic €1 trillion spending package for defense and infrastructure, aiming to strengthen its military and reduce reliance on the U.S. for security
    • Economists warn that to maximize the benefit of the spending package, Germany must implement structural reforms, including cutting corporate and income taxes, streamlining bureaucracy, and fixing its pension system, which is projected to become unsustainable by 2035
    • The European Commission plans to cut steel imports by 15% starting in April by tightening its safeguard mechanism, which imposes tariffs on excess imports, to counter global overcapacity and protect EU steelmakers
    • The EU’s steel industry faces challenges from high energy costs, cheap imports, and global overproduction, with capacity utilization at an unsustainable 65%. Additionally, over half of the region’s aluminum production has been idled since 2021, prompting the consideration of further protective measures

• China

• • • Xi Jinping was displeased over a Hong Kong company’s sale of Panama Canal ports to a U.S.-led group, as it bypassed Beijing’s approval, with Chinese authorities reviewing the deal for possible intervention
    • The $22.8 billion deal sparked backlash from Beijing, with Chinese media warning of potential sanctions on Hong Kong companies if the sale went through, while Panamanian officials maintained the ports were neutral
    • China reported strong economic activity in early 2025, with retail sales and industrial production exceeding expectations, despite rising unemployment and ongoing struggles in the property market. Retail sales increased by 4% in the first two months compared to the previous year, and industrial production rose by 5.9%.
    • The government unveiled a policy plan to boost domestic consumption through higher wages, pensions, and incentives for childbirth, while setting a 5% growth target for 2025 despite challenges from escalating U.S. tariffs

• Turkey

• • • Turkish authorities detained Istanbul Mayor Ekrem Imamoglu, a key rival to President Erdogan, in a politically charged move that many see as an attempt to eliminate opposition ahead of upcoming elections

• Venezuela

• • • Venezuelan President Nicolas Maduro condemned the deportation of over 200 Venezuelan migrants to a notorious El Salvador prison, calling it a “kidnapping” and demanding their return, while the U.S. justified the move by linking the deportees to a criminal gang

• Indonesia

• • • Indonesia’s parliament passed controversial military law revisions allowing more civilian roles for military officers, sparking protests from civil society groups who fear a return to authoritarian rule, while the government defends the revisions as necessary for national security

• Germany

• • • Friedrich Merz, Germany’s incoming conservative chancellor, secured crucial support from the Green Party for his proposal to relax the country’s strict debt rules, allowing significant increases in defense and infrastructure investment amid growing geopolitical tensions

• Canada

• • • Former central banker Mark Carney decisively won Canada’s Liberal Party leadership race and met with outgoing Prime Minister Justin Trudeau to prepare a swift power transition, aiming to confront a damaging trade war with President Trump’s United States

• South Korea

• • • Acting President Choi Sang-mok, worried about being targeted by Trump’s escalating tariffs, wants to communicate directly with Trump to prevent new economic tensions, but the U.S. is reluctant to engage until South Korea’s leadership crisis is resolved

• Sudan

• • • Sudan has categorically refused a request by the U.S. to discuss taking in Palestinian refugees displaced under Donald Trump’s controversial Gaza redevelopment proposal, which involves turning Gaza into a luxury tourist area and displacing its more than 2 million residents

• Pakistan

• • • Pakistani security forces ended a deadly train hijacking by Baloch separatist militants, resulting in the deaths of 21 passengers, 4 paramilitary personnel, and 33 militants, in an attack highlighting ongoing regional tensions

• United Kingdom

• • • Labour leader Keir Starmer and finance minister Rachel Reeves face intense backlash, including their own MPs, over plans to significantly cut benefits, including disability payments, raising accusations that the government is betraying traditional Labour values

Commodities

• Oil Prices

• • • WTI: $68.32 per barrel
      • +1.70% WoW; (4.74%) YTD; (16.36%) YoY
    • Brent: $72.18 per barrel
      • +2.27% WoW; (3.30%) YTD; (16.02%) YoY

• US Production

• • • U.S. oil production amounted to 13.6 million bpd for the week ended March 14, down 0.1 million
      bpd from the prior week.

• Rig Count

• • • The total number of oil rigs amounted to 593, up 1 from last week.

• Inventories

• • • Crude Oil

      • Total U.S. crude oil inventories now amount to 437.0 million barrels, down (1.8%) YoY.
      • Refiners operated at a capacity utilization rate of 86.9% for the week, up from 86.5%
        in the prior week.
      • U.S. crude oil imports now amount to 5.470 million barrels per day, down (14.2%) YoY.

    • Gasoline

      • Retail average regular gasoline prices amounted to $3.13 per gallon in the week of
        March 21, down (11.4%) YoY.
      • Gasoline prices on the East Coast amounted to $3.06, down (11.3%) YoY.
      • Gasoline prices in the Midwest amounted to $2.97, down (12.1%) YoY.
      • Gasoline prices on the Gulf Coast amounted to $2.73, down (14.5%) YoY.
      • Gasoline prices in the Rocky Mountain region amounted to $3.12, down (4.9%) YoY.
      • Gasoline prices on the West Coast amounted to $4.20, down (6.9%)
      • Motor gasoline inventories were down by 0.5 million barrels from the prior week.
      • Motor gasoline inventories amounted to 240.6 million barrels, up 4.2% YoY.
      • Production of motor gasoline averaged 9.62 million bpd, down (0.3%) YoY.
      • Demand for motor gasoline amounted to 8.817 million bpd, up 0.1% YoY.

    • Distillates

      • Distillate inventories decreased by -2.8 million in the week of March 21.
      • Total distillate inventories amounted to 114.8 million barrels, down (3.2%) YoY.
      • Distillate production averaged 4.613 million bpd, down (1.6%) YoY.
      • Demand for distillates averaged 4.010 million bpd in the week, up 5.9% YoY.

• Natural Gas

• • • Natural gas inventories increased by 9 billion cubic feet last week.
    • Total natural gas inventories now amount to 1,707 billion cubic feet, down (26.8%) YoY.

Credit News

High yield bond yields decreased 9bps to 7.47% and spreads tightened 2bps to 348bps. Leveraged loan yields decreased 7bps to 8.60% and spreads increased 2bps to 491bps. WTD Leveraged loan returns were positive 10bps. WTD high yield bond returns were positive 42bps. 10yr treasury yields decreased 4bps to 4.23%. Yields decreased as investors absorbed a Fed meeting and a better tone to data related to labor markets, housing, and consumer spending. Leveraged loan prices stabilized this week due to minimal surprises from the Fed and reduced retail outflows, while primary market activity hit a year-to-date low with repricing activity.

High-yield:

Week ended 3/21/2025

• 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 3/21/2025

• 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: Mitel Networks ($900mn, 3/9/2025), Rugs USA ($486mn, 3/3/2025), Aimbridge Hospitality ($1.1bn, 1/31/2025), Exela Intermediate LLC ($1.2bn, 1/15/2025), and City Brewing ($886mn, 1/2/2025)

CLOs:

Week ended 3/21/2025

• 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 + HY Defaults by Sector – LTM

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)x

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