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Junk bond sales surge as companies try to beat fresh tariff uncertainty

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Junk bond sales surge as companies try to beat fresh tariff uncertainty

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US companies with risky credit ratings are rushing to sell junk bonds ahead of an expected resurgence of trade tensions in July that could depress demand for corporate debt.

Companies with weaker credit ratings tapped the high-yield bond market for $32bn in May, the most since October, according to data from JPMorgan. Junk bond sales in the first week of June already have surpassed April’s $8.6bn total.

Bankers and investors say they expect a steady flow of new debt sales during the rest of the month and into July while demand remains high and market uncertainty stays relatively low.

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But the expiration of the 90-day pause on Donald Trump’s so-called “liberation day” tariffs early next month could set up another surge in uncertainty, echoing the early April ructions that ground the market for new levered debt deals to a halt.

“You get into these patterns where the market gets into a lull and gets ahead of itself. It feels good now, but it’s setting up for some volatility in July,” said David Forgash, a portfolio manager at Pimco.

The extra costs paid by risky corporate borrowers to lenders compared to US government debt, known as spreads, jumped from 3.5 percentage points on April 1 to 4.61 percentage points on April 7, according to Ice BofA data.

That was the highest level for corporate borrowing costs since May 2023, as investors demanded a higher premium for the added risk they saw following Trump’s April 2 tariff announcement.

As progress appeared to be made in trade negotiations between the US and China, spreads retreated back to the levels experienced in late March. Still, they have not come back to the historically low marks seen in late 2024 and early 2025, when junk bond spreads fell below 3 percentage points.

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One leveraged finance banker noted that debt markets have been able to look past not only Trump’s new tariffs, but the protracted conflicts in Israel and Palestine and between Russia and Ukraine when deciding whether and how much to invest.

But higher than expected tariffs or a new geopolitical conflict involving a world power “could throw a spanner in the works”, the banker said.

“I don’t think we’re going to go back to April where the market is grinding to a halt, but it’s certainly going to cause spreads to be wider,” the banker said.

There is also strong demand for highly rated corporate credit. Bank of America strategists say they expect investment-grade bond sales to be between $110bn and $120bn in June, which would be the most for the calendar month since 2021.

Kyle Stegemeyer, head of investment grade debt capital markets and syndicate at US Bancorp, said he expected companies to continue to take advantage of lulls in volatility before potential surges due to tariffs and tax bill negotiations.

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“I think most issuers are coming to the conclusion that if there’s an open window and the backdrop’s attractive, why wait it out until closer to maturity?”

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How Each House Member Voted on the Iran War Powers Resolution

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How Each House Member Voted on the Iran War Powers Resolution

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Measure passed with 215 “yes” votes to 208 “no” votes.
Vote Total Democrats Republicans Bar chart of total votes
215 211 4
208 0 208

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Note: Representative Kevin Kiley of California is an independent who caucuses with the Republicans.

The House on Wednesday passed a measure to direct President Trump withdraw U.S. forces from Iran or win congressional approval to continue military operations there. The vote was the fourth of its kind in the chamber since the war began, the previous three having failed.

A vote on this measure was originally scheduled for last month but was pulled by House Republican leaders after it became clear they lacked the votes at the time to defeat it because of several members’ absences. Several Republicans were also absent on Wednesday, but party leaders were unable to delay the vote any longer.

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Votes fell mostly along party lines, with the exception of four Republicans, who voted with Democrats to pass the measure. Representative Jared Golden, Democrat of Maine, who had previously voted with Republicans, flipped and voted with his party.

Republicans who voted against their party

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The House vote came after four Senate Republicans last month broke from their party to advance a measure to assert the legislature’s role in authorizing the war. The Senate had rejected seven other similar measures, but Republicans in both chambers have expressed increased uneasiness with the conflict as it wears on.

Even if a war powers resolution passed in both the House and Senate, it would be subject to an all-but-certain veto by Mr. Trump, which would need a two-thirds majority in both chambers to override. Beyond that, the president and his senior aides have frequently dismissed efforts by Congress to rein in his war powers, saying they are unconstitutional.

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How Every Member Voted

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House votes to rein in Trump on Iran as war loses GOP support

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House votes to rein in Trump on Iran as war loses GOP support

Washington — The House on Wednesday passed a measure that would force President Trump to end the war with Iran without congressional authorization, marking the first time the lower chamber has defied the White House on the conflict. 

The House voted 215 to 208 to approve the war powers resolution with the help of four Republicans. Democratic Rep. Jared Golden of Maine, who has voted against the three previous failed attempts, also dropped his opposition and voted for the measure, giving his party unanimity on the issue.

Republican Reps. Thomas Massie of Kentucky, Brian Fitzpatrick of Pennsylvania, Tom Barrett of Michigan and Warren Davidson of Ohio voted with Democrats in favor of the measure.

Democrats in the chamber erupted in applause after passage.

The vote was supposed to take place before lawmakers left for the Memorial Day recess, but House GOP leaders abruptly pulled the vote when it became clear they did not have the numbers to block it. Several Republicans were absent and others were expected to support it. 

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The Senate advanced a similar measure in May to rein in Mr. Trump on Iran after four Republicans joined all but one Democrat to push it forward. Three Republican absences also helped deliver the breakthrough after seven previous unsuccessful votes. 

But the Senate’s procedural vote was just the first step on the way to potential passage, and Republicans will have another opportunity to block it in the coming days.

It’s unclear when they plan to vote on the House version. In a statement, House Democratic leaders called on Senate Republicans “to do the right thing.” 

Support for the war from some Republicans waned after the conflict passed a statutory 60-day deadline under the War Powers Resolution of 1973, which says the president must remove armed forces from hostilities if Congress has not authorized the war. The war passed the deadline on May 1, but the administration has argued that a fragile ceasefire stopped the clock in early April, though both sides have carried out attacks since then.

The Trump administration has also argued the War Powers Resolution of 1973 is unconstitutional, though that theory has never been tested in court.

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Republicans who have voted in favor of limiting Mr. Trump’s military powers in Iran have been uncomfortable with the lack of congressional authorization on the war and a strategy to end it. Some fear the war’s unpopularity and the economic fallout could harm the GOP’s chances at keeping control of Congress after the midterm elections in November. 

GOP Rep. Ashley Hinson of Iowa, who is running for Senate, said in a private exchange at a campaign stop last week that the war could be a “political liability” if it continues beyond “the next couple of weeks,” according to audio obtained by CBS News. 

But Mr. Trump said last month he was in “no hurry” to make a deal with Iran ahead of the midterms. 

“Everybody’s saying, ‘Oh, the midterms, I’m in a hurry.’ I’m in no hurry,” he said. 

The resolution approved Wednesday was introduced in April by Rep. Gregory Meeks of New York, the top Democrat on the House Foreign Affairs Committee. It directs the president “to remove United States Armed Forces from hostilities with Iran,” unless Congress declares war or authorizes the use of military force. 

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Rep. Brian Mast of Florida, the Republican chairman of the House Foreign Affairs Committee, earlier Wednesday called it a “stupid political vote” that “weakens the president’s hands as he’s negotiating with Iran.” 

After the vote, Meeks brushed off the assertion that the war powers votes have undercut the president during negotiations with Iran. When asked whether Democrats would keep forcing votes to end the Iran war, Meeks told reporters, “You can expect us to continue to do our jobs.” 

“We’re going to continue to do our constitutional responsibilities,” he said. 

Fitzpatrick, who also voted in favor of a war powers resolution in May, said, “The law is the law.” 

“We have to follow the law. There’s a law on the books,” Fitzpatrick said. “So you have two choices: You either follow the law or you change the law. You can’t violate the law. That’s not an option.” 

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During floor debate on the measure on May 20, Democrats questioned why Republicans haven’t held a vote on an authorization for military force to provide Mr. Trump with legal guardrails for attacking Iran. 

“If my Republican colleagues believe this is justified, they should bring an AUMF to the floor,” Meeks said.

There’s been little momentum so far behind an AUMF introduced by Barrett earlier in May. 

Rep. Kevin Kiley of California, an independent who caucuses with Republicans, argued there are “better tools” for Congress to assert its authority. 

“We actually have the ability to provide direction as to how funds should be used,” Kiley said, referring to Congress’ power of the purse. “I understand why people want to use whatever tools are available, but I believe that Congress should use those tools of congressional oversight and the powers we have under Article I that really have teeth here.” 

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Map: 5.1-Magnitude Earthquake Strikes off the Coast of California

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Map: 5.1-Magnitude Earthquake Strikes off the Coast of California

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Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Pacific time. The New York Times

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A moderately strong, 5.1-magnitude earthquake struck in the North Pacific Ocean on Wednesday, according to the United States Geological Survey.

The temblor happened at 5:45 a.m. Pacific time about 40 miles west of Petrolia, Calif., data from the agency shows.

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As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

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Aftershocks detected

Subsequent quakes have been reported in the same area. Such temblors are typically aftershocks caused by minor adjustments along the portion of a fault that slipped at the time of the initial earthquake.

Quakes and aftershocks within 100 miles

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Aftershocks can occur days, weeks or even years after the first earthquake. These events can be of equal or larger magnitude to the initial earthquake, and they can continue to affect already damaged locations.

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When quakes and aftershocks occurred

 All times are Pacific time. The New York Times

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Sources: United States Geological Survey (epicenter, aftershocks, shake intensity); LandScan via Oak Ridge National Laboratory (population density) | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Pacific time. Shake data is as of Wednesday, June 3 at 6:03 a.m. Pacific time. Aftershocks data is as of Wednesday, June 3 at 8:01 a.m. Pacific time.

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