Systematic Credit and Equity G-255 Trading Indicators for December 15, 2025
Friday's trading session showed above-average trading volume while US Technology equity and credit took a large hit after both Oracle (ORCL Baa2/BBB short credit/long equity) and Broadcom (AVGO A3/A- long credit/equity) both failed to meet US equity analyst expectations with their report results on Wednesday and Thursday.
Broadcom new supply bonds from September 22, 2025, remain the highest rated long trade G-255 credit indicator of all 6,000 bonds in the USD portion of our trading universe.
Single A TMT, Single A US Regional Banks and Single A TMT remain the 3 top G-255 long credit trading sectors with the most long capital.
Single A Big 6 banks, BBB US Utilities and Single A rated Healthcare are the 3 top G-255 short credit trading sectors with the most short capital.
The top long G-255 Equity sectors remain US Technology, US Utilities and Global Communications.
The top short G-255 Equity sectors are US Autos, Non-US Autos and Australian Banks.
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Friday G-255 Credit Trading and Friday G – 255 Sector Trade Indicators
Friday saw +2 to +4 bp widening in Investment Grade G-255 trading and +4 to +8 bp wider in High Yield. We saw a small inflow into corporate bond mutual funds in the week ending December 11, following outflows in both High Yield and Investment Grade corporate bond ETFs for the week ended December 9. It took one day of G-255 credit showing over 1,000 short indicators, representing 66% of the entire overvalued G-255 credit market value, for USD credit spreads to widen materially. G-255 equities remain attractive overall, with communications and "low-tech" issuers the most compelling. US Utilities and USD BB TMT are also attractive G-255 long-equity sectors. Credit, however, continues to look overvalued per the G-255 stochastic trading model.
Top traded IG G – 255 issuer: Oracle (Baa2/BBB short credit/ long equity) +4bp Friday
Top Traded HY G – 255 issuer: PEMEX (PEMEX B1/BBB) unchanged Friday
Key Trading indicator economic results Friday:
None
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G-255 Credit Market Valuation and New G – 255 Supply December 15
On a Risk/Reward basis, High Yield bonds have far outperformed Investment Grade in 2025
UST 10-Year Rates: Down -22 basis points (bp) year-over-year (YoY) and -39 bp year-to-date (YTD). US Credit Spreads reached their tightest point of the year on Friday, February 21, 2025, and widest on Thursday, April 10, 2025.
Despite the U.S. Fed funds rate declining -75 bp over the past 12 months, 10-year UST rates have fallen -22 bp YoY, while 5-year UST rates are down -52 bp YoY. This muted decline in longer-duration UST rates has driven overall credit spreads wider in 2025.
Bloomberg 10Y credit spreads are derived by taking the Moody's index yield and subtracting the UST 10Y YTM.
US Fund Flows – Week Ended December 10 (vs. prior week), per LSEG Lipper
Short & Intermediate Investment-Grade bonds: +$1.65 bn inflow (vs. +$1.6 bn)
High-Yield notes: +$541.8 mm inflow (vs. +$1.19 bn)
Treasuries: +$181.8 mm inflow (vs. -$3.06 bn outflow)
US Leveraged Loans: -$123.3 mm outflow (vs. -$182.5 mm)
Mortgage-related: +$184.8 mm inflow (vs. +$86 mm)
No new G-255 USD corporate bond issuance on Friday
December 2025 G-255 New-Issue Activity (YTD)
During December, 8 G-255 issuers have sold 19 bonds totaling $21.2 billion, led by single-A-rated pharma issuer Merck (Aa3/A+), which priced an $8 billion 8-part transaction.
Bond ETF Flows – Week Ended December 9 (week-over-week change)
Broad bond-market ETFs: +$1.01 bn â cumulative $4.32 bn
Corporate bond ETFs swung -$2.07 bn â outflows of -$247.8 m
Investment-Grade corporate ETFs: +$73.1 mm â cumulative $1.4 bn
High-Yield corporate ETFs: -$427.5 mm â cumulative $1.17 bn
Dedicated corporate bond ETF detail:
Dedicated IG corporate bond ETFs: -$989 mm outflow (vs. +$509 mm inflow prior week)
Dedicated HY corporate ETFs: -$711 mm outflow (vs. -$285 mm prior week)
G-255 New-Issue indicator results
On Thursday, one additional November 2025 new issue, three October issues, one August issue, and one July issue reached their model-defined "avoid" levels.
Across all 2025 G-255 new issues, 89% of the indicators that have triggered have produced an average return of just under -8 bp over a 34-day holding period. Year-to-date, 965 of 1,082 bonds issued ($1.122 trillion notional) have hit avoid signals.US fund flows for the week ended Dec. 10, compared to a week earlier, according to LSEG Lipper.
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G-255 Credit and Equity Market Indicators December 15
Attractive Long Credit Indicators: 91, (+19 from Friday and -15% below the 200-day moving average of all long indicators).
Attractive Long Credit Market Cap accounts for: 52% of all undervalued Systematic Credit capital.
Attractive Short Credit Indicators 967, (-80 from Friday and +88% above the 200-day moving average of all model short trade indicators).
Attractive Short Credit Market Cap accounts for: 64% of all overvalued Systematic Credit capital.
G-255 Equity Trade Indicators and US Equity Correlation to Overall US Credit Spreads
US equities and credit markets traded in similar directions with credit spreads wider and US equity prices lower Friday. The two markets have directionally correlated in 16 of the past 21 trading days.
US equities are +1.5% over the past month; US credit spreads are now tighter MoM.
2025 is on track for the second-weakest year in 32 for USD credit-equity correlated movement—historic 80% vs. ~74% this year.
Systematic Equity Trading Indicators December 15
• Attractive Long G-255 Equity Trade Indicators: 58 (includes both undervalued and equities priced at
extreme discount (-4 from Friday and -16% below the 200-day moving average of all long-trade
indicators).
• Attractive Short Equity Trade Indicators 8, (-2 from Friday) and -18% to the 200-day moving
average of all model short trade indicators).
Why are G-255 equity issues outperforming the S&P and Dow? A: Over 30% of the 242 publicly traded G -255 equities have already reached their 2025 low price and 40% of the G-255 issuers are non – US corporates.
G-255 issuers are returning more capital to shareholders (via dividend growth and share repurchase) than S&P issuers as a whole.
Highest ranked equity long indicators on Friday:
Meta Platforms Inc (META) Comcast Corp (CMCSA) Walt Disney Co/The (DIS)
Oracle Corp (ORCL) T-Mobile US Inc (TMUS) Royal Caribbean (RCL)
Macquarie Group Ltd (MQG AU) Southern Co/The (SO) Unilever PLC (UNA NA)
Kroger (KR) SoftBank Group Corp ATT (T)
Equities leaving highest ranked long indicators on Friday: American Tower (AMT)
G -255 Issuer News Friday
Intel Corp (Baa2/BBB long credit/equity) is in advanced talks to acquire Samba Nova Systems Inc. for about $1.6 billion including debt.
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G-255 Specific Credit Sector Indicators December 15
Long Opportunities:
Focus on de-leveraging issuers, including Single A and BB rated TMT, Single A rated Healthcare, UK Banks, US Regional Banks, Canadian Banks and Floating Rate Notes.
Valuation Insight: The stochastic credit trading model identifies 175 undervalued bonds ($317.9 billion market
value), with 91 long trade indicators across the 6,000-bond USD universe.
At present Single A and BB rated TMT are the only sectors with 10 or more long trade indicators.
Short Opportunities
1,529 bonds ($2.679 trillion) are overvalued per the stochastic credit trading model, with 967 short trade indicators.
U.S. Big 6 Banks: 312 bonds ($780.8 billion) are overvalued with 218 short trade indicators.
Single A and BB Energy: No longer a short indicator as of 10/27. Bonds +6 to +14 bp 9/27 -10/27
Single A Healthcare: 126 bonds ($181 billion) are overvalued with 97 short trade indicators.
Single A Industrials: No longer a short indicator as of 10/22. Bonds +6.5 to +15 bp 9/22 -10/22
Autos: 167 bonds ($178 billion) are overvalued, with 135 short trade indicators
Systematic Portfolio Daily Trading Model Indicators
Long Indicators: Target deleveraging new issues with attractive valuations, focusing on 5-year maturities.
Short Indicators: Target releveraging issuers trading at the deepest discount from their model avoid point, avoiding 7-year maturities due to low attractiveness.
Replace Longs: Swap long positions that have reached their avoid trading level.
Portfolio Trading Hurdle: Maintain a 1:1 long-to-short ratio once the 67.5% long position threshold is reached.
Current Status: Add new supply trades where the issuer is deleveraging; add new issue bonds where spreads widened by +2 basis points.
Current Status of Trading Indicators: Last week, one short trade and two long trades reached their avoid trading level. The trading model added three long indicators.
Monitor Trade Position Composition:
Track the percentage of long positions relative to the total portfolio.
If replacing long positions that have reached their avoid trading level pushes the portfolio above the 65% long hurdle, initiate short positions in releveraging issuers (avoiding 7-year maturities) at a 1:1 ratio for additional long positions.
Review: Reassess portfolio balance after today's fund flow data to ensure alignment with the systematic strategy.
Look for individual bond indicators to change overnight: Historic trading levels are leading to overnight adjustments to long, short and avoid indicator levels.
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G-255 Specific Bond Trading Indicators December 15
Closed Positions: The General Motors (Baa2/BBB) GM 3.6 06/21/30 short trade indicator reached its avoid trading level on Monday 11/24. Florida P&L (Aa2/A+) NEE 5.6 02/15/66 reached its avoid trading level on Friday December 5. Philip Morris (A2/A) PM 4 1/4 10/29/32 and McDonald's (Baa1/BBB+) MCD 4.4 02/12/31 new issue trade indicators both reached their avoid trading levels Tuesday 12/9. Celanese (Ba2/BB) CE 7 02/15/31 and Capital One (Baa1/A-) COF 5.197 09/11/36 new issue trade indicators both reached their avoid trading levels Wednesday 12/10.
Enter New Longs: The new Amazon (A1/AA) AMZN 4.35 03/20/33 was added to the Model Trade on Monday 11/17. On Tuesday December 2, the Florida Power & Light (Aa2/A+) NEE 5.6 02/15/66 and on Wednesday December 3, Celanese (Ba2/BB+) CE 7 02/15/31 were added as new issue long indicators.
Enter New Short Trades: The trading model added BP (A2/A) BPLN 4.893 09/11/33 as a short trade on Thursday 11/20, the Toyota (A2/A) TOYOTA 4.8 01/05/34 Monday 11/21 and the CVS (Baa3/BBB) CVS 1 3/4 08/21/30 on Monday 11/24. The model again produced a short trade indicator for General Motors (Baa2/BBB) GM 3.6 06/21/30 on Monday 12/8/25.
Current Sample Systematic Basket bond trades based on trading strategy December 15
Systematic Trading Indicators Friday: Lloyds Bank Baa3/BBB- LLOYDS 6 5/8 PERP reached its avoid trading level.
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G-255 Credit Basket Trade Statistics
Wednesday's Basket Trade Long/Short Ratio: 64%
Systematic Long/Short Basket Trade Performance Report (January 4, 2025 – December 12, 2025)
Performance Summary: Total Trades: 192 (1% of total trade indicators).
Long Indicators: 131/147 reached avoid-trading levels, tightening by -9.22 bp.
Short Indicators: 36/45 reached avoid-trading levels, widening by +5.85 bp.
Remaining Longs: 16 tightened by -.8 bp.
Remaining Shorts: 9 tightened by -16.7 bp.
Average Spread Movement: ± 6.66 bp in the indicated direction.
Success Rate: 86% of indicators reached avoid-trading levels, which is slightly below normal.
Average trade holding period: 22.9 days (above average)
Disclaimer - This report is not intended as, and does not constitute an offer, or a solicitation to buy or sell any securities or financial instruments. All data, levels, opinions, and representations herein are provided for informational purposes only and should not be relied upon for making investment decisions. Past performance is not indicative of future results. The authors of this report assume no liability for losses or damages arising from the use of this information. Investors should consult with a qualified financial advisor before making any investment decisions. The information in this report is based on sources believed to be reliable, but no guarantee is made as to its accuracy, completeness, or timeliness.