Tariffs, Federal Government Layoffs Ignite Recession Fears U.S. Credit Risks Climb

On Monday morning, relevant indicators showed that U.S. credit risk reached the highest level this year, and investors showed a new round of concerns about the state of the economy under tariffs and federal layoffs. The Markit CDX North American Investment Grade Index widened as much as 2.06 basis points to 53.54, its highest since 2025, as many investment-grade borrowers did not choose to issue bonds on Monday. The index moved higher as credit risk climbed. The Markit CDX North America High Yield Index, which fell as credit risk increased, fell 0.5 points to 106.4, a six-month low. Barclays strategists Bradley Rogoff and Dominique Toublan wrote in a note on Friday that if the U.S. does experience a recession in 2025, it will be led by weak consumption. They believe that this is unlikely, but it is no longer unthinkable. "We increasingly see the massive consumption downturn caused by factors such as tariff uncertainty, DOGE layoffs and equity market weakness as tail risks that cannot be ignored."