AI Rally Revives Credit Risk Appetite, Ending Longest Spread-Widening Streak

The signal here is correlation, not credit fundamentals: investment-grade spreads are tightening because equities are rallying, which suggests positioning and sentiment are driving the move rather than any reassessment of issuer balance sheets. That matters for credit desks and portfolio managers who have spent months watching spreads grind wider, since a two-session reversal after such a long widening streak is fragile evidence of a turn. The open question is whether spread tightening can persist independently of the AI trade — if it can't, credit is effectively levered to a single equity theme.