Summary

• August 2025 met expectations despite seasonal slowdown.
• Financials led while modest issuance activity was noted across all sectors.
• Investor demand remained robust across tenors and capital structure.
• September is expected to be an active month based on historical data and strong IG Credit technical.

Economics

The August data confirmed the U.S. economy is cooling but not cracking. Payroll growth slowed sharply to +73k in July, while unemployment held at 4.2% and claims hovered in the 220–230k range – clear signs of a softer labor market. Inflation remains sticky around 3%, with July CPI up 0.2% MoM and PPI easing back, pointing to stable but not fully resolved price pressures.

Growth momentum is mixed. Q2 GDP was revised up to 3.3%, yet manufacturing weakened – ISM stuck in contraction, factory orders down 4.8%, and durable goods soft. On the other hand, consumers are still spending, and housing surprised to the upside with stronger starts and new home sales. Confidence measures ticked lower, but activity hasn’t rolled over.

Net-net: the Fed is seeing progress toward a soft landing. Inflation isn’t reaccelerating, jobs are cooling, and growth is moderating but resilient. The market is pricing in and expecting a rate cut come Septembers FOMC meeting, however post September future rate cuts remain in question and data dependent.

US Treasuries

The curve steepened in August, led by long-end underperformance while the front end rallied. 2Y fell from 3.68% → 3.62% (-6.5bp), 10Y nudged up 4.22% → 4.23% (+1.2bp), and 30Y rose 4.82% → 4.93% (+10.5bp). Slopes widened: 2s10s +8bp to ~61bp and 5s30s +16.7bp to ~123bp. Rates vol stayed manageable with MOVE averaging ~80.4, peaking ~89.2 on Aug 5 and troughing ~76.7 on Aug 15. Net: a long-end led selloff versus a slightly softer front end, delivering a steepener with volatility contained.

August: USD Investment Grade Credit

August 2025 proved to be a steady but active month for the investment-grade primary market, with total issuance reaching $99 billion. This figure landed squarely within expectations of $90–100 billion and sits comfortably in line with historical norms. To put this in context, last year’s August supply came in at $108 billion, while 2023 saw a more subdued

$69 billion. The pandemic-era surge of 2020 still stands out as a high watermark at $136 billion, but overall, this year’s August was consistent with the seasonal pattern of moderate summer issuance.

The month was defined by a number of standout transactions across sectors. Standard Chartered set the tone early with a $2 billion 11-year deal that priced at T+120. The order book reached $7.5 billion, roughly 3.5 times oversubscribed, underscoring global demand for high-quality financial issuance. Barclays followed with a $1.5 billion four-year at T+83, also well covered at 3.4 times, further cementing the financial sector’s dominance during the period. Energy was another bright spot, with MPLX executing a $1.5 billion 10-year at T+130 on the back of a $5.5 billion order book. This transaction was part of a broader energy wave that included ONEOK’s $1.25 billion 30-year at T+147 and Chevron’s $1.25 billion seven-year at T+52, both of which drew solid demand. On the corporate side, CVS Health brought a $1.5 billion 10-year at T+117 that achieved 4.2 times coverage, while Eli Lilly and MSCI each tapped the 10-year sector with $1.25 billion deals, highlighting investor appetite for healthcare and technology credits.

Across sectors, the issuance mix was well balanced. Financials clearly anchored supply, but energy companies were prominent as well, leveraging favorable windows to extend duration. Consumer and healthcare names added further depth, while technology and communications issuers rounded out the roster. Books were consistently strong, with order coverage ranging between three and five times, and multiple transactions saw peak demand of $5 billion or more. New issue concessions were minimal to nonexistent, with most deals pricing flat to initial talk, reflecting robust secondary sponsorship and a constructive tone in credit markets.

Investment-grade credit strengthened modestly in August, with both cash and synthetic markets tightening into month-end. The Bloomberg U.S. IG Corporate OAS (LUACOAS) edged in from 80bp on August 1 to 79bp on August 29, a 1bp tightening, averaging around 77bp through the month. Yields also eased slightly as spreads compressed: the IG Yield-to-Worst (LUACYW) declined from 4.94% to 4.91% (-3bp), while holding near 4.94% on average. The CDX IG index followed the same tone, tightening from 53.9 to 51.0 (-3bp), with an average level near 50.8 across August.

Looking ahead, September looms as the heaviest month of the year for new issuance. Historically, the month has averaged more than $150 billion in supply in years unaffected by Fed-related volatility, with 2019, 2020, and 2021 each topping $150 billion. The outlier remains 2022, which saw only $78 billion amid severe rate volatility and market dislocation. In the current environment, with pipelines well stocked and earnings blackout windows ending, the Street is broadly expecting between $150 billion and $160 billion in September 2025. Activity is likely to be led once again by financials, alongside large-cap corporates and opportunistic issuers in the energy sector.

August 2025 Tombstones

AmeriVet Securities is pleased to have participated in Kentucky Utilities $700m 30Y FMB, Barclay’s $3.25b 3-part debt offering, PPL Electrics $500m 30Y FMB, and Public Service Electric & Gas $450m 10Y FMB, reinforcing our commitment to delivering Tier II and Tier III investor access to high-quality issuers.

September Economic Calendar