Euro IG Credit Outlook Q3 2025: Stay cool this summer as economic growth persists and normalcy resumes

Fixed Income Boutique
Perspective
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En bref

  • Euro IG bond market showed resilience in Q2 despite geopolitical shocks (US-China tensions, Israel-Iran conflict), with spreads tightening 5–12 bps vs. end-March; higher-beta credit (e.g. AT1s) also rebounded strongly
  • Fed turning more attentive to labour market conditions; alongside easing inflation markets price two rate cuts by year-end. Powell signalled openness to earlier easing; yields trending lower, supporting credit
  • US-China trade deal in progress, tariffs less disruptive than feared; business investment picking up, boosting sentiment for risk assets
  • Eurozone inflation below ECB’s 2% target, with disinflation expected to continue; services activity weak, but manufacturing more stable and Germany improving; ECB likely to stay accommodative
  • Technicals in Euro IG remain strong: ~65% of expected net supply through year-end covered by coupon reinvestments; high issuance completion by banks adds stability and supports demand
  • Outlook remains constructive: strong fundamentals, favorable technicals, attractive valuations, and a supportive monetary policy backdrop should help markets navigate summer volatility and sustain credit strength.

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Vontobel Fund - Euro Corporate Bond
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Europe European Corporate Bonds Fixed Income Boutique Income Macroeconomics Obligations Perspective US
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