Corporate Bond Market Insight - How are Government Shifts, Fed Divisions and AI Ambitions Shaping 2026?

Key takeaways from the latest edition:

Fourth-quarter GDP is estimated to reduce between 1.0% to 2.0% because of the record-breaking government shutdown. However, the Atlanta Federal Reserve GDPNow is still projecting nearly 4% Q4 growth.

There seems to be growing division among the Federal Open Market Committee (FOMC) committee members. With several committee members supporting more cuts, the odds of a December cut rose to nearly 80%.

Issuance expectations for next year are increasing. Mergers, acquisition financing and the needs of the artificial intelligence hyperscalers suggest that 2026 could set a record.

Consumer sentiment has declined, but American consumers are generally still in solid shape with declining but still high employment numbers and steadily rising wages.