Credit Market Rallies Most in Two Years as Inflation Abates

US credit markets surged by the most in two years on Thursday after inflation showed signs of moderating, boosting the prospects of corporate borrowers.

A key measure of US credit risk -- the Markit CDX North American Investment Grade Index -- saw spreads tighten the most since September 2020, while the equivalent high-yield gauge rallied the most since November 2020. Traders moved to temper rate hike predictions for December’s Federal Reserve meeting, though investors remain skeptical of a pivot given that inflation remains high.

“Ride the wave for now,” Scott Kimball, managing director of fixed income at Loop Capital ...