GS Shelofsky IG Credit Week in Review

GS Shelofsky - IG Credit Week in Review 20 Sep 2026 Brad Shelofsky · Goldman Sachs · Managing Director, IG Credit Trading Sun 20 Sep 2026, 6:48pm ET

IG100 closed -3.5bps tighter, outperforming periods of macro weakness as all-in-yield levels, defensive setup, and the composition of the well-anticipated supply remains supportive. A hawkish Fed hike, crude oil persistently above $100 per barrel, and heightened concerns around the AI ecosystem have all coincided with a puzzling and frustrating grind to a sub 15 VIX. While a Long End Corp Index a ~6.3% screens extremely supportive, we have started to see demand shift down the curve to the belly given the flattening of the rate curve. AI vs. AI at Risk posted its worst day since DeepSeek on Monday (-2.2 standard deviations) following Dario’s call for a more measured pace. Credit markets were largely unfazed, and Monday through Wednesday marked the second-best three-day stretch of Debt/Equity outperformance since the basket’s launch. Primary market remains robust in volume but only 5% of supply was in the long end as duration remains allusive. 640mm of IG outflows this week. With IG total return negative YTD (-1.4%) there will understandable focus on whether that’s a one off data point or start of a larger trend. YTD flows +197bn vs +97bn YTD ’25.

Following the unanimous Fed decision to hike and hawkish tilt to the day, the rate curve continued to twist flatten. 10s30s now sits at a one-year low and we have seen the effects emerge in a few forms within the IG world. Frist, we are seeing a shift down the curve from the all-in-yield buyers. The 7-12y bucket was the most net bought on tflow last week with 1.8bn of secondary buying and our PT business saw 1.7:1 better buying in the 7-15y bucket, our largest skew. The second dynamic has been a touch more nuanced; Given the flattening of the rate curve, there was a notable increase in demand for 7-9y paper and 12-15y paper given the improved relative value on a G-Spread basis.

Source: Marquee PlotTool Prolinked note as of 18 Sep 2026, past performance is not indicative of future returns

The primary market themes seen throughout September persisted this week: high issuance volumes with limited market impact. Total supply reached $55bn across 22 deals, modestly above the $50bn forecast, though only 5% was issued in the long end of the curve. The week was highlighted by Citigroup’s $12bn four-part offering, the largest transaction in the bank’s history. Demand remained strong, with average oversubscription of approximately 4x, marking the fourth-highest weekly average YTD. Month-to-date issuance now stands at $137bn, with risks increasingly skewed to the downside of our $230bn monthly forecast.

Debt/Equity correlation across the AI complex remains extremely low. The space continues to trade more or less exclusively on supply/demand technicals rather than fundamental drivers. Monday delivered a 2+ standard deviation move in equities following Dario's call for pacing. Against that backdrop, our hyperscaler basket widened a mild 1.8bps on the day, then rallied more than 7bps tighter across Tuesday and Wednesday as favorable positioning, short covering, and a brief pause in supply proved dominant. Follow that with a 3.5bp sell off as stocks rally back to end the week:

30y Hyperscalers — AI Equity Basket 14-Sep — +1.8bps — -4.98% 15-Sep — -3.9bps — -0.35% 16-Sep — -3.3bps — 0.88% 17-Sep — +1bp — 2.37% 18-Sep — +2.6bps — 0.63%

Source: GS FICC and Equities as of September 18. Past performance is not indicative of future results

Munis Screen Cheap: Our Muni team with a good piece last week highlighting the rel val of the space here. High-tax states with a taxable- equivalent yield near 10%, in the 90-100th percentile on a 1, 5, and 10 year lookback versus IG corps and UST. Rate vol has suppressed the retail bid and record supply has led to stretched ratios. Saw a similar move last summer before a 10-15% move retracement in ratios.