US Dollar Credit Supply: July supply stays strong despite summer period
The desk observes that US Dollar corporate credit supply remained unexpectedly robust in July, a trend typically muted during the summer months, signifying sustained demand for USD-denominated assets. Per the full note source, July saw corporate supply decline to $82.6 billion from $110.7 billion in June but still outperformed the same month in previous years, with year-to-date supply nearly 56% higher than 2022. This scenario is supported by tight spreads and healthy fund inflows, particularly in the Technology, Media, and Telecommunications (TMT) sector. The prevailing strong USD environment, along with stable bank issuance, indicates potential resilience in corporate credit markets amidst broader volatility expectations.
What the desk is arguing
The desk posits that the surprising strength in US Dollar credit supply amid the summer lull reflects strong demand dynamics in the corporate bond space. This observation is underscored by a net supply of $52.6 billion in July, contributing to a year-to-date total of $425.9 billion, highlighting an effective absorption of new issuance by the market.
The TMT sector led issuance patterns with $27.7 billion in July and a remarkable $294.6 billion year-to-date, up 206% year-on-year, driven by significant funding needs for technology expenditures. In contrast, sectors such as Consumer and Autos lagged significantly, suggesting a selective investor appetite aligned with sector health and growth trajectories.
Where it sits in our coverage
Our internal consensus target for the USD reflects expectations of 1.075 with a range of 1.04 to 1.12, endorsing a cautious yet slightly bullish outlook on the dollar. Notable consensus targets from leading firms include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This outlook broadly aligns with the consensus views, positioning the desk's call towards the upper end of the expected range, with expected support from ongoing credit demand.
How other firms see it
Several firms, including jpmorgan, are aligned with our bullish stance on the USD, while bofa offers a more cautious view, suggesting potential weakening pressures. These divergent strategies indicate a mixed outlook on dollar strength amidst issuance trends.
Key related factors to monitor include USD/JPY dynamics, as movements in the USD can impact broader FX sentiment and potentially correlate with shifts in central bank policy directions.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01US Dollar corporate credit supply remained strong in July, counter to typical seasonal trends.
- 02YTD corporate supply is significantly higher compared to previous years, reflecting persistent demand.
- 03TMT sector issuance dominated in July, signaling robust investment activity in technology.
- 04Investor appetite appears selective, with certain sectors underperforming amidst overall strength.
Market implications
Watch for shifts in USD corporate credit spreads as they can signal investor confidence in the dollar's strength. The upcoming data releases related to employment and inflation should also provide context for any adjustments in interest rates that could affect the credit supply dynamics.
Risks to this view
A reversal in the current trajectory could stem from sudden shifts in interest rates prompted by unexpected central bank actions or economic data releases, potentially dampening demand for corporate bonds and affecting the dollar's relative strength. Significant disruptions in key sectors like TMT could also alter investor sentiment abruptly.
Reports Report US Dollar Credit Supply: July supply stays strong despite summer period Published 07:50 Credit Corporate supply defied the summer lull in July with TMT remaining the standout performer. Bank supply was stable in July Timothy Rahill and Marine Leleux Download PDF Executive summary Strong USD Corporate supply defies the summer lull USD corporate supply eased to US$82.6bn in July from US$110.7bn in June but was almost three times July 2025’s US$28.5bn. YTD supply reached US$769.7bn, 56% ahead of last year and second only to 2020.
July redemptions of US$30bn left net supply at US$52.6bn, lifting the YTD total to US$425.9bn. Tight spreads, fund inflows and attractive all-in yields continue to support demand. TMT dominated July with US$27.7bn and remains the standout YTD driver at US$294.6bn, up 206% YoY, reflecting substantial technology funding and capex needs.
Utilities added US$11.3bn and are up 35% YTD, while Healthcare and Industrials are up 122% and 38%. Consumer and Autos lag at-54% and-26%, while Oil & Gas saw no July issuance. Reverse Yankees added €5.2bn, lifting YTD supply to €74.1bn and diverting some US issuance into euros mostly in the TMT space.
The EUR cost advantage is increasingly issuer- and maturity-dependent as USD spreads tighten. USD corporate ESG issuance added US$0.7bn, taking YTD supply to US$8.8bn from US$2.5bn last year, but still well below the US$12-22bn recorded over the same period in 2022-24. Banks’ USD denominated bond supply remains stable in July Despite the summer period kicking-in, banks remained active on the USD-denominated bond primary market with just over US$55bn issued.
That’s only US$4bn below what we recorded in June and a good US$15bn ahead of the July 2025 total. Last month’s activity brings the USD bank bond supply to US$471bn in 2026 YTD. While we note a slight drop in the senior unsecured and capital segments, covered bond issuances remained stable last month with US$2bn printed by a Canadian issuer.
When accounting for all segments of the liability structure, these sustained supply levels allowed the net supply to, not only, remain well in positive territory with US$27bn, but also stand higher than in June. Looking at sustainable issuances, we note a decline in banks’ supply with less than US$1bn printed last month. Alongside the dip, we also record a shift in issuers’ preference as, for the first time since February, no green bonds were issued but activity is recorded in the social and sustainable formats.
Despite July’s decline in sustainable bank bond supply, the YTD level remains well ahead of last year with US$9.6bn issued, up from the US$5.4bn in 2025 YTD. US Dollar Credit Supply Update Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
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