US credit risk hits new high amid economic worries over tariffs and job cuts, here's what you should know

Investment Grade Index, a key measure of credit risk for top-rated borrowers, widened by 2.06 basis points to 53.54, marking the highest level of US credit risk in 2025, according to a Bloomberg report. When this index rises, it signals that investors see higher risks in lending to these companies. Meanwhile, the Markit CDX North American High Yield Index, which tracks riskier borrowers, dropped by 0.5 points to 106.4, its lowest point in six months. As per Bloomberg, unlike the investment-grade index, this one falls when credit risk increases, showing that investors are becoming more cautious about lending to lower-rated companies.

What is Credit Risk for the US?

Credit risk refers to the likelihood that a borrower, whether a company or government, might fail to repay their debts. When credit risk rises, it means lenders and investors are worried about getting their money back. This can lead to higher borrowing costs for businesses and governments, as lenders charge more to compensate for the increased risk.

Why does it matter?

High credit risk can slow down economic growth. If businesses face higher borrowing costs, they may cut back on investments, hiring, or expansion plans. For governments, increased credit risk can make it more expensive to fund public projects or manage debt. In the US, the current spike in credit risk is tied to concerns about tariffs, which can disrupt trade and raise costs for businesses, and federal workforce cuts, which could weaken consumer spending and economic activity.

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