Global Credit Bullets | Monday, 20th April 2026

Markets – War is over

Hopes for a long-lasting understanding within the Middle-East conflict are now pervasive, pushing risk markets back to highs. While rhetoric is sometimes harsh, both the US and Iran are displaying a relatively strong appetite for a deal. Markets are thus focusing more on intentions than on any actual progress. The ceasefire agreed on 7th April expires on 21st April, but both parties have indicated scope for an extension. The announced ceasefire between Israel and Lebanon facilitates progress towards a final agreement, but differences persists regarding nuclear and security guarantees, meaning more time is needed to achieve a stable situation. Major equity indexes, notably in the US, crossed February highs over the past week, and credit spreads are back to the tightest levels of the year. The only premium remains in rates, as higher inflation commands levels 40 basis points wider than in February. Irrespective of the war development, Hormuz traffic remains low (c.10% of pre-war) and oil hovers at $100 (vs $65 in February). We continue to think that markets underestimate the potential for demand destruction stemming from commodity prices and view current levels in risk as an opportunity to hedge or reduce risk.

IMF Meetings – Bullish investors despite energy uncertainty

Investors were bullish on risk assets across DM/EM amid hopes for an Iran resolution, but the key focus from here shifts to the extent of energy disruption from the Iran conflict. JPM estimated that it would take around four months for energy markets to normalise, assuming an instant reopening of Hormuz. For the US, investors see the Fed likely on hold this year and pile back into Dollar shorts amid unpredictable policy and ongoing hedging progress. In Europe, the ECB and BoE have pushed back against immediate hikes, and investors noted the ECB is more likely to hike than the BoE. Interestingly, private credit was less in focus and termed by Jamie Dimon (CEO of JPM) as non-systemic. AI discussions evolved mostly around the new Claude Mythos model and implications for cybersecurity, while the near-term economic impact remains uncertain.

IMF Meetings – The bulls are back in EM

Investors are firmly bullish on EM, with strong demand for risk as markets largely look through inflation shocks and keep growth concerns in the background. Importantly, the starting point is much stronger than in 2022, with higher real rates and greater resilience to an energy shock, even if fiscal space is now more constrained. A clear and crowded consensus is to sell the dollar, driven by fiscal concerns and policy uncertainty, with expectations for further downside, favouring emerging markets FX. Latin America stands out as the key beneficiary, supported by elevated oil revenues, resilient growth, and strong investor focus on the upcoming elections in Colombia and Brazil. On USMCA, sentiment is constructive, with investors viewing current discussions as a review rather than a renegotiation and expecting an agreement to be reached. Central and Eastern Europe is seen as well positioned to absorb shocks, although fiscal risks remain in place. In contrast, the Gulf is losing its safe haven appeal amid rising uncertainty around energy infrastructure and defence spending, while the Russia-Ukraine is still expected to remain a prolonged conflict despite more constructive headlines.

Algebris Investments’ Global Credit Team