Systematic Credit and Equity G-255 Trading Indicators for December 22, 2025
Long Opportunities: - Sectors are shown with the most recent long trade indicator date for comparison
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 103 undervalued bonds ($348.1 billion market
value), with 94 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 – sectors shown with the most recent short trade indicator date for comparison
1,519 bonds ($2.658 trillion) are overvalued per the stochastic credit trading model, with 925 short trade indicators.
U.S. Big 6 Banks: 305 bonds ($765 billion) are overvalued with 175 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: 125 bonds ($184 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: 165 bonds ($174.3 billion) are overvalued, with 143 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; avoid 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 62.5% long position threshold is reached.
Current Status: Add new supply trades where the issuer is deleveraging; add new issue bonds where spreads have widened by +3 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 62.5% long hurdle, initiate short positions in releveraging issuers (avoiding 5-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 22
Closed Positions: 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. Credit Agricole (A3/A-) ACAFP 4.818 09/25/33 reached its avoid trading level Thursday December 18. McDonald's (Baa1/BBB+) MCD 4.4 02/12/31 reached its avoid trading level Friday December 19.
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. ATT (Baa2/BBB) T 4.9 11/01/35 was added as a G – 255 (9/18/25) de-levering new issue trading more than +2bp to NIP.
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 22
Systematic Trading Indicators Friday: McDonald's (Baa1/BBB+) MCD 4.4 02/12/31 reached its avoid trading level. ATT (Baa2/BBB) T 4.9 11/01/35 was added as a G – 255 (9/18/25) de-levering new issue trading more than +2bp to NIP indicator.
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G-255 Credit Basket Trade Statistics
Friday's Basket Trade Long/Short Ratio: 60%
Systematic Long/Short Basket Trade Performance Report (January 4, 2025 – December 19, 2025)
Performance Summary: Total Trades: 192 (1% of total trade indicators).
Long Indicators: 132/147 reached avoid-trading levels, tightening by -9.23 bp.
Short Indicators: 36/45 reached avoid-trading levels, widening by +5.85 bp.
Remaining Longs: 14 tightened -.92 bp.
Remaining Shorts: 9 tightened by -15.44 bp.
Average Spread Movement: ± 6.83 bp in the recommended direction.
Success Rate: 88% of indicators reached avoid-trading levels, which is slightly below normal.
Average trade holding period: 23 days (above average)
G-255 Trade Sizes and Systematic Trade Process
The G-255 Equity and Credit Indicators for the World's Largest Issuers of Corporate Bonds
G-255 represents the world's 255 largest issuers of corporate securities and have a minimum equivalent of $15 billion of tradable liquid debt market capital in all global currencies.
At present there are just under 6,000 G-255 USD bonds in circulation.
The average capitalization of each G-255 bond is just over $1.2 billion (including floating rate notes).
There are 242 publicly listed equities for the G-255 debt issuers that trade in 8 currencies.
The total equity market capital of the 242 stocks is just over $44 trillion or $182 billion per issuer. That is 60% larger equity capital per constituent than the S&P 500.
80 of the 242 publicly traded equities for the G-255 are domiciled outside of the United States.
G-255 Credit Indicator USD Trading Liquidity
The Systematic G-255 trading system is designed to trade with no human input. Each fixed coupon USD trading indicator requires $750mm of outstanding market capital and $250mm of total trading volume in the prior 30 trading days if not a new issue.
Each G-255 floating rate note USD trading indicator requires $300mm of outstanding market capital and $50mm of total trading volume in the prior 30 trading days if not a new issue.
Each G-255 underlying equity is listed on the issuer's national equity trading exchange.
G-255 Credit Indicators USD Trading Process and Size – Overall Strategy Is Designed for $3 Trillion of Assets
The G – 255 equities and bonds are the most liquid cash securities in their local markets. The USD bond and equity indicators are "systematic" and employ only publicly available issuer disclosure and market trade prints on TRACE or any of the US trading exchanges.
The G- 255 trading process is designed for "systematic" trading on electronic platforms for both equities and bonds.
The trading system is designed to handle the largest institutional trade sizes as a result. The ability to trade size is dependent on user resources and trading relationships as all of the USD corporate bonds in the G-255 systematic trading model are traded OTC by over 80 dealers and all 5 major US electronic bond trading firms.
G-255 Credit Indicators and USD Liquidity - 80% of All Daily TRACE Trades
The G-255 Credit trading indicators cover 80% (95% of all USD investment grade and 48% of all USD non-investment grade trades) posted daily on NASD TRACE.
G-255 Trade Indicators are created daily for all 6,000 securities.
Indicator calibration: The stochastic credit trading model employs earnings data to recalibrate balance sheet leverage and valuation indicators, and then compares spread-to-curve, earnings momentum, and debt ratios relative to the issuer's trading history.
Bond-level granularity: G-255 USD issuers average 27 USD bonds outstanding ($27.5 billion of USD debt cap per issuer). The systematic model assesses historical relative value across the capital structure and creates indicators for overvalued or undervalued bonds.
Equity-credit linkage: For dual-listed (equity and corporate bond) issuers, equity signals (cashflow comparisons and returns to shareholders influence credit spreads). G-255 disclosures synchronize these inputs and produce long and short trading indicator levels for each security that meets the model's liquidity minimum.
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Credit Trading Allocation and Sector Indicators, Friday Trading December 22
Friday marked the start of "end-of-year" trading. Volumes were approximately 20% below normal. With no new supply and over $45 billion in G-255 called and matured bonds, we observed significant investment-grade (IG) end-user buying toward the end of the week.
Throughout the week, we have highlighted Oracle (ORCL; Baa2/BBB – short credit/long equity), Meta (META; Aa3/AA – long credit/equity), and Broadcom (AVGO; A3/A- – long credit and equity) as primary focal points, attracting substantial research from both equity and credit analysts. Much of the analysis continues to treat
operating leases as balance sheet debt. We address this issue again on page 5.
G-255 systematic trading short-credit indicators rose slightly for only the second day in the week. As shown on page 5, it is unlikely we will reach the 1,100 level on the G-255 short indicator—or 75% of overvalued re-levering G-255 issuer capital—without meaningful equity appreciation in the U.S. technology and industrial sectors.
While G-255 equities remain modestly attractive overall, prior appreciation in select single-A TMT and BBB consumer equities (particularly communications) has limited further upside.
Top traded IG G – 255 issuer: Oracle (Baa2/BBB short credit/ long equity) -1 bp Friday
Top Traded HY G – 255 issuer: Flash Computer (Ba3) -3 bp Friday
Key Trading Indicator Economic Results Friday:
November existing-home sales rose by 2k month-over-month to a seasonally. The median home price increased 1.2% year-over-year to $409,200 (the lowest level since March).
University of Michigan Consumer Sentiment (December):
Final index: 52.9 (vs. preliminary 53.3; prior month 51.0)
Current economic conditions: 50.4 (record low; vs. preliminary 50.7 and prior 51.1)
Expected change in median home prices over the next year: 4.2% (vs. preliminary 4.1% and prior 4.5%).
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G-255 Equity Indicators: U.S. Technology remains the most attractive sector. Yankee Banks are the least attractive.
Historic G-255 Equity/Credit Correlation Will Drive U.S. Credit Valuation
Additional U.S. economic data and balance sheet "analysis" circulated over the weekend. Federal Express (FDX; Baa1/BBB+ – short credit/long equity) reported results that underscored weakening U.S. economic and corporate earnings momentum, reinforcing current G-255 equity and credit trading signals.
Operating Leases and Corporate Net Debt:
We continue to see commentary framing capital expenditures and new operating leases by issuers such as Meta (META; Aa3/AA- – long credit/equity), Oracle (ORCL; Baa2/BBB – short credit/long equity), and other technology companies investing in AI as equivalent to issuing corporate debt.
Quantitatively, this view is incorrect. Operating leases are not the same as debt issuance or an "avoidance" of debt. They represent assets and liabilities that will generate future expenses against revenue.
G-255 Trading Model Output:
To reiterate (without sounding repetitive): Meta and Oracle generate $200 billion and $60 billion in annual revenue, respectively, both growing 15%+ and accelerating. The G-255 trading model—which has been accurate on over 90% of its ~6,000 daily indicators—does not treat operating leases as balance sheet debt. When markets overreact (or underreact), the model generates clear long and short trade indicators for both corporate bonds and equities.
Single A and BBB Industrials:
With FedEx now reported, the G-255 Industrials sector (the fourth largest in the index) shows the opposite trend to Technology. Industrials are rapidly expanding balance sheets while returning capital to shareholders even faster, with revenue growth ~90% slower than G-255 Technology issue
Single A Industrials (W/ Berkshire Hathaway)
4 issuers de-levering/14 re-levering
7 issuers positive earnings growth/11 negative earnings growth.
Single A Industrials (W/O Berkshire Hathaway)
4 long credit/13 short credit trade indicators
13 long equity/3 short equity trade indicators
Burlington Northern equity is not publicly traded
G-255 BBB Industrials
5 long credit/6 short credit trade indicators
11 long equity trade indicators
Sector is de-levering slightly YoY
G-255 Industrials (28)
9 issuers are de-levering/20 are re-levering
Away from Berkshire Hathaway:
Sector Net Debt has grown 14.5% QoQ and
22.2% YoY to $739 billion while revenue is up 5% YoY
Best Trades
Long T-Mobile (TMUS) equity/ Long ORCL equity Short ORCL protection/ Long ORCL 4.45% 09/26/30 (+135 vs. 5Yr UST)
Long Meta October 30 new supply (front-end bonds expected to outperform initially per the G-255 model)
Long Broadcom (AVGO) September 22 new supply
Best Hedge: US IG CDX; ORCL equity put spread.
For Long Only accounts: Overweight Industrials, Technology and Communications. Underweight: Auto, Big Six Banks and Single A Healthcare
Top Long Credit Trading Indicators: Broadcom (AVGO) and Meta (META)
No G-255 long credit issuer is deleveraging faster than AVGO (A3/A- – long credit and equity).
As of September 30, 2025, Meta had more cash than debt.
The Broadcom bonds were sold a week after the most recent cyclical credit spread peak (according to the G-255 Systematic Credit Trading model) occurred on September 22.
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G-255 Credit Market Valuation and New G – 255 Supply December 22
On a Risk/Reward basis, High Yield bonds have far outperformed Investment Grade in 2025
UST 10-Year Rates: -42.6 bp year-to-date (YTD). US Credit Spreads reached their tightest point of the year on Tuesday, 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 43 bp YoY, while 5-year UST rates are down -73bp 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.
Lipper LSEG data showed short and intermediate investment-grade bonds: $1.28b inflow vs. $2.26b inflow for the week ending December 17. High-yield notes showed: $1.79b inflow vs. $541.8m inflow
Corporate bond ETFs recorded the largest weekly change, with inflows rising by $2.88 billion to $2.97 billion.
Investment-grade ETFs expanded by $2.82 billion to $4.59 billion.
High-yield ETFs expanded by $875.4 million to $2.13 billion.
December 2025 G-255 New-Issue Activity (Year-to-Date)
In December, 8 G-255 issuers priced 19 bonds totaling $21.2 billion, led by single-A-rated pharmaceutical issuer Merck (Aa3/A+), which priced an $8 billion 8-part transaction.
G-255 New-Issue Indicator Results
On Friday, 4 Yankee Bank Perps and FRN reached their avoid trading level.
Across all 2025 G-255 new issues, 90% of the indicators that have triggered produced an average return of just under -8 bp over a 34-day holding period.
G-255 New-Issue Indicator Results
On Friday, Credit Agricole (A3/A-) ACAFP 4.818 09/25/33 reached its avoid trading level.
Across all 2025 G-255 new issues, 90% of the indicators that have triggered produced an average return of just under -8 bp over a 34-day holding period.
Year-to-date, 966 of 1,082 bonds issued (totaling $1.147 trillion notional) have hit avoid signals.
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G-255 Credit and Equity Market Indicators December 22
Attractive Long Credit Indicators: 94, (-12 from Friday and -13% below the 200-day moving average of all long indicators).
Attractive Long Credit Market Cap accounts for: 51% of all undervalued Systematic credit capital.
Attractive Short Credit Indicators 925, (+61 from Friday and +78% above the 200-day moving average of all model short trade indicators).
Attractive Short Credit Market Cap accounts for: 57% 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 directionally with credit spreads tighter and US equity prices higher Friday. The two markets have directionally correlated in 19 of the past 25 trading days.
US equities are +3.5% over the past month; US credit spreads are 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 22
• Attractive Long G-255 Equity Trade Indicators: 53 (includes both undervalued and equities priced at
extreme discount (-9 from Friday and -33% below the 200-day moving average of all long-trade
indicators).
• Short Equity Trade Indicators +8, (+1 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:
ATT (T) Oracle Corp (ORCL) T-Mobile US Inc (TMUS) Macquarie Group (MQG AU) Southern Co/The (SO) Occidental Petr (OXY) Crown Castle (CCI) Dell (DELL)
American Tower (AMT)
Equities leaving highest ranked long indicators on Friday: Meta (META), Softbank (9984 JT)
G -255 Issuer News Friday.
None
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G-255 Credit and Sector Indicators for "Long Only" trading strategies December 22
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.