GS Shelofsky IG Credit Week in Review 23 Aug 2026

GS Shelofsky - IG Credit Week in Review 23 Aug 2026 Brad Shelofsky · Goldman Sachs · Managing Director, IG Credit Trading Sun 23 Aug 2026, 6:23pm ET

Top-level index performance and volatility levels continue to understate the magnitude of the sector- and factor-driven moves beneath the surface. The VIX closed at 15 on Friday, within one point of its year-to- date low, yet the GS AI vs. AI at Risk pair fell 10%, while the GS High Beta Momentum basket declined 10.5%. Many investors assumed the de-grossing-driven moves at the end of July had left the market in a cleaner position, however, some of that de-risking has carried into a choppy August. Given the flow dynamics over the past two months, the overlap between 12-month winners and 3-month winners has fallen to multi-year lows, while the overlap between 12-month winners and 3-month losers is approaching multi-year highs.

Despite elevated rate volatility and a continued historic pace of supply, higher all-in yields and optimism around a quieter two-week stretch of supply have helped sustain IG credit at the index level, with IG100 only 0.7bps wider this week, while the AI basket continues to lag, widening by 5bps.

Bessent’s announcement on Wednesday was a key focal point this week. For the IG investor base, a modest rate rally would be supportive for spreads, as greater stability would unlock pent-up extension and outright duration demand. However, the market’s inability to sustain the rally provided additional ammunition for bears on Thursday and Friday.

From the TSY Desk (Brandon Brown): Treasury announced they will increase long end buybacks by at least $2bn per operation for the remainder of the refunding quarter. It is our expectation that the increased sizes of buybacks will persist into future quarters as well. Given there are 9 operations this quarter, we see this as a minimum increase of $18bn per quarter, or $72bn per year, bringing the total long end buybacks to $144bn per year. The increase is equivalent to a 16% reduction in 20y and 30y supply.

A more bearish read from GIR in this week’s Global Rates Trader: Increased long-end buybacks do not address what we see as the main sources of recent long-end volatility. Fundamental factors and macro risks—rather than a supply-demand imbalance—are the primary drivers of the selloff, while global spillovers are keeping a higher floor under long-end yields across markets. As long as the underlying drivers including cyclical resilience, inflation risk, and policy uncertainty remain unresolved, attempting to suppress long-end rates volatility via supply adjustments will simply push the pressure elsewhere—i.e. cheaper belly rates and/or a weaker currency. The experience in the Gilt and JGB markets in recent years underscores the limited capacity of long-end supply reductions to compress risk premia without more favorable macro dynamics materializing.

While the rates market has faced significant fundamental headwinds, I would argue that the IG market has been driven primarily by persistent supply-related pressures. $22bn this week brings the MTD total to $160bn, officially eclipsing the previous record set in 2020. Year-to-date now stands at $1.63tn, +33% YoY. The next two weeks should be light, however, September is firmly in focus as we are calling for

$230bn compared to a 5-year average of $165bn and a record of $235bn set last year. I wouldn’t say there is clear indigestion at spot, rather clients see the forward calendar and exercising more patience. New issue concessions expanded to 3.5bps this week and the past two weeks have had the highest amounts of orderbook attrition of the year as the market becomes more discipline on pricing.

QTS provided a useful data point for the AI funding discussion. The deal was initially marketed in the HY market, but structural adjustments allowed a shift to an IG rating and syndication process. The final outcome was a $3.9bn 5 non-call 2 issue that priced with a 6.625% coupon and a 2.5-point OID. A few takeaways stand out. First, the transaction highlights the short-duration nature of the next wave of AI- related funding. While hyperscaler issuance is in later innings for 2026, financing needs…