European credit markets remained resilient amid elevated volatility, driving increased adoption of Eurex Credit Index Futures for risk management, beta benchmarking, and taking advantage of dislocations across macro credit products.
Macroeconomic backdrop
In the first half of 2026, the European credit market demonstrated remarkable resilience against a highly challenging backdrop of sticky inflation and persistent geopolitical shocks. Rising energy prices pushed headline euro area inflation to a stubborn 3.2% in May, prompting the European Central Bank (ECB) to raise interest rates by 25 basis points to 2.25% in June. This hawkish policy tightening occurred even as economic momentum softened, with annual euro area GDP growth forecasts slowing to a sluggish 0.5%, pointing to an uncertain macroeconomic picture in the second half of 2026.
European credit market review
Despite a highly volatile early spring that saw the Bloomberg Euro Aggregate Corporate and Pan-European High Yield (Euro) Average OAS indices spike to 98 and 333 basis points, respectively, on geopolitical fears, the credit market staged a swift and robust recovery. By late May and June, risk premiums had compressed significantly. At the end of June, Investment Grade (IG) OAS over sovereign curve tightened to 80 basis points, while High Yield (HY) OAS settled near historical lows of approximately 269 basis points. This stabilization indicated that investors successfully decoupled from immediate macro anxieties, choosing instead to focus on resilient corporate balance sheets and highly attractive yields.
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