Systematic Credit and Equity G-255 Trade Indicators for November 24, 2025
Let's be clear: yesterday's –1.75% drop in U.S. equities had nothing to do with a sudden downgrade in December Fed rate-cut odds. If you believe that narrative, I've got a few bridges for sale — great views, prime locations.
We've been saying it for weeks:
No hard government data + clear signs of material U.S. economic slowing from the world's largest corporations = not a recipe for all-time-high equity prices.
Yesterday's news that October inflation and employment data will be delayed just added fuel to the confusion.
Market confusion = volatility. Yesterday, that meant a –1.75% equity drop.Corporate credit widened slightly on Thursday.
We've been consolidating G-255 earnings into a new, streamlined format — which temporarily delayed our capture of short opportunities in global autos and Australian banks. No excuses. We'll be fully caught up by Tuesday, including missing U.S. electric utilities and detailed issuer write-ups.
Key Takeaway from the last week of earnings results:
Most auto companies (not Volkswagen, Toyota or Hyundai) are experiencing a downturn in unit sales and as well higher use of balance sheet owing to return of capital to shareholders. There a numerous factors impacting the industry as well as the global economy including (but not limited to) US trade policy (or lack thereof), vacillating US dollar, cost of aluminum and significant changes in tax status of electric vehicles.
A couple of Australian banks had very poor interim results owing to (a) lower interest rates on assets held, (b) higher wage and technology expense and (c) higher cost of credit. We note that phenomena is not currently being reported by Japanese, European or US banks.
Lower Energy prices are putting smaller producers and delivery companies in a bind given the growing demand for return of capital. Managements (TC Energy as an example) are being faced with the dilemma of not raising dividend or share repurchase (or in some cases lower shareholder returns) and relying on additional balance sheet leverage even with a reduction in capital returns.
G-255 equities are at fair value for the first time since late May. With corporate bond ETF flows declining week-over-week and US HY mutual fund outflow, there is no change in the trading model's daily trade allocation.
Top traded IG G – 255 issuer: Verizon (Baa1/BBB+ attractive long credit/equity) (-1 to -2bp) on Thursday
Traded HY G – 255 issuer: Pemex ( B1/BBB attractive long credit) (+4 to +6bp) Thursday
Key Systematic Trading Model Economic Indicators Reported Thursday:
None
UST 10-Year Rates: -31bp YoY and -44bp YTD.
Bloomberg 10Y credit spreads are derived by taking the Moody's index yield and subtracting the UST 10Y YTM.
November has seen 14 G-255 issuers, 45 bonds and $55.6 billion of USD supply.
Corp Bond ETF flows fell by -$1.8 billion to $807 mm in the week ending November 11, 2025
Dedicated Investment Grade corporate bond ETFs had net outflow of -$203mm
Dedicated High Yield corporate ETFs have net outflow of -$399mm
Mutual Fund flows for the week ended November 12, 2025 (LSEG LIPPER)
Short and intermediate investment-grade bonds: $3.1b inflow vs. $1.82b inflow
High-yield notes: $955.1m outflow vs. $459.1m inflow
Treasuries: $289.2m outflow vs. $315.3m inflow
US leveraged loans: $136.8m outflow vs. $132m outflow
Mortgage-related: $454.1m outflow vs. $85.5m inflow
Attractive Long Credit Indicators: 103, (+13 from Thursday and -6% below the 200-day moving average of all long indicators. )
Attractive Long Credit Market Cap accounts for: 40% of all undervalued Systematic Credit capital.
Attractive Short Credit Indicators 454, (-48 from Thursday and -11% below the 200-day moving average of all model short trade indicators).
Attractive Short Credit Market Cap accounts for: 32% 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 correlated directionally but only slightly for an 13th trading day in 21.
US equities are roughly 1% higher WoW; US credit markets are wider in the week ended November 13.
US equities are +2.3% higher over the past month, US credit spreads are now materially wider.
2025 is on track for the second-weakest year in 32 for USD credit-equity correlated movement—historic 80% vs. ~73% this year.
Systematic Equity Trading Indicators November 13
• Attractive Long G-255 Equity Trade Indicators: 73, (+3 from Thursday and +20% above the 200-day moving
average of all model long trade indicators).
• Attractive Short Equity Trade Indicators 7, (+2 from Thursday and -31% below the 200-day moving
average of all model short trade indicators).
For G-255 issuers, equity prices of the world's most indebted companies fell -2.4% Thursday and -2.3% over the past week, while the S&P 500 fell -1.66% Thursday and rose +.26% over the past week.
G-255 Equity and Credit Indicators – How we use them
• G-255 issuers are the world's 255 largest issuers of corporate debt, as tracked and analyzed in
proprietary systematic credit trading model featured in the "Systematic Trading" Report on Substack and
universe represents the most heavily indebted and actively traded global companies.
• The G-255 refers to a standardized reporting framework used by USD bond issuers to disclose quarterly
financial results. It's not a regulatory mandate but a market convention tracked by systematic credit analysts and
traders. The exact list of 255 issuers isn't publicly detailed but aligns with globally indebted giants.
• Indicator calibration: Credit trading models use earnings data to recalibrate valuation indicators, such as spread to-curve, earnings momentum, and debt ratios.
• Bond-level granularity: Many G-255 issuers have multiple bonds outstanding. Systematic models assess
relative value across the capital structure, flagging overvalued or undervalued bonds.
• Equity-credit linkage: For dual-listed issuers, equity signals (cashflow comparisons and returns to
shareholders influence credit spreads. G-255 disclosures synchronize these inputs
Long Opportunities:
Focus on de-leveraging issuers, including Single A and BBB-rated TMT, BBB-rated Energy,
Euro Yankee Banks, and Floating Rate Notes.
Valuation Insight: The stochastic credit trading model identifies 238 undervalued bonds ($395.9 billion market
value), with 90 long trade indicators across the 6,000-bond USD universe.
Short Opportunities
1,435 bonds ($2.23 trillion) are overvalued per the stochastic credit trading model, with 454short trade indicators.
U.S. Big 6 Banks (all ratings):No longer a short indicator as of October 22. Bonds +5 to +18.5 bp since 9/22.
Single A and BB Energy: No longer a short indicator as of October 27. Bonds +5 to +18 bp since 9/27.
Single A Healthcare: No longer a short indicator as of October 22. Bonds +4 to +15 bp since 9/22.
Single A Industrials: No longer a short indicator as of October 22. Bonds +5 to +17 bp since 9/22.
Autos: 132 bonds ($146.2 billion) are overvalued, with 78 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.
Closed Positions: John Deere Cr. (A2/A) DE 5.45 01/16/35 short trading indicator reached its avoid trading level Wednesday 11/3. BP (A2/A-) BPLN 3.06 06/17/41 short trading indicator reached its avoid trading level Tuesday 11/4. Citicorp (A3/BBB+) C Float 09/11/31 long trading indicator reached its avoid trading level Wednesday 11/5. General Motors Financial (Baa2/BBB) GM 2.7 06/10/31 short trading indicator reached its avoid trading level Friday 11/7.
Enter New Longs: Lloyds Bank (A3/A-) LLOYDS Float 11/04/31 was added by the trading model as another long trade indicator on 11/4. The trading model added Meta (AA3/ AA-) META 4 7/8 11/15/35 and META 5 1/2 11/15/45 new supply long trade indicators on Friday.
Enter New Short Trades: The trading model added Cigna (Baa1/A-) CI 2.4 03/15/30 and HCA (Baa2/BBB-) HCA 3 5/8 03/15/32 as short trade indicators 11/3.
Current Sample Systematic Basket bond trades based on trading strategy
New Trade Indicators Thursday: None
Thursday's Basket Trade Long/Short Ratio: 67%
Systematic Long/Short Basket Trade Performance Report (January 4, 2025 – November 13, 2025)
Performance Summary: Total Trades: 184 (1% of total trade indicators).
Long Indicators: 125/144 reached avoid-trading levels, tightening by -9.23 bp.
Short Indicators: 33/40 reached avoid-trading levels, widening by +5.70 bp.
Remaining Longs: 19 widened by +3.92 bp.
Remaining Shorts: 7 tightened by -10.02 bp.
Average Spread Movement: ± 6.5 bp in the recommended direction.
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.