Credit markets brace for Trump tariffs fallout

Traders have largely shrugged off the threat of global trade wars, but worries remain about economic weakness

The US corporate bond market has largely avoided the large selloffs that plagued US equities this year, but traders warn that economic uncertainty and potential trade wars could reignite volatility in an asset class that remains near historically low spreads to government bonds.

Supported by demand for high-yielding debt and strong corporate fundamentals, risk premiums on US corporate bonds neared multi-decade lows in recent months. And while the S&P 500 has dropped roughly 7% from its February