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Container ship departures from China to the US are collapsing, see the first chart.
When consumers cannot get the products that they want from abroad, and the products that are imported are more expensive because of tariffs, the outcome is a slowdown in US consumer spending, see the second chart.
The bottom line is that US consumer spending is facing headwinds from tariffs, relatively high interest rates, student loan payments restarting and deportations lowering the number of consumers.
Note: Displays the estimated number of container vessels departing China for the United States, focusing on dry cargo ships. Aggregates data using a 15-day rolling average to reduce short-term volatility and provide a clearer view of broader trends in vessel activity. Sources: Bloomberg, Macrobond, Apollo Chief Economist 
Sources: US Census Bureau, Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Our latest outlook for credit markets, authored by my colleagues John Cortese, Rob Bittencourt, Akila Grewal, Shobhit Gupta, and Tal Barak Harif, is available here.
Key Takeaways
- Tariff-driven headline risk, geopolitical volatility and fiscal policy shifts disrupted markets in the year’s first half—but failed to derail the credit cycle. Strong macro and corporate fundamentals, steady institutional demand and limited new supply helped anchor spreads. While downside risks have grown, fundamentals and technicals are expected to remain supportive through the end of the year.
- The investment-grade bond market has become increasingly bifurcated, with most liquidity concentrated in a small set of recent issues, while older bonds trade infrequently and offer little spread pickup. This dynamic was put to the test during the volatility surrounding Liberation Day. For long-term investors, private credit may offer a better alternative—providing similar liquidity with higher spread compensation.
- Global capital is rebalancing away from the US: In the wake of the geopolitical tensions and US domestic policy shifts during the first half of the year, early signs of capital rotation out of US assets may be starting to emerge. Sovereign funds and central banks are reallocating toward Europe—fueling strong inflows into the region’s equity and credit markets.
- Europe’s private credit market is large, underpenetrated and gaining momentum. Non-bank lending accounts for an estimated 12% of corporate financing versus 75% in the US. Structural tailwinds—regulatory reform, fiscal stimulus and favorable pricing—are creating a scalable growth opportunity, positioning Europe as a key market for direct lending.
- The generative AI boom is no longer just an equity story—it’s increasingly being financed through credit. Hyperscalers are issuing billions to fund data centers, while early-stage AI firms are tapping debt markets to scale. As capex soars and adoption accelerates, credit investors are helping fund the physical backbone of the AI economy.
See important disclaimers at the bottom of the page.
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The number of banks in the US has declined significantly over the past 40 years, see chart below.
Sources: Federal Deposit Insurance Corporation, Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Forecasts show that data center energy demand will grow from 5% of total US power demand today to more than 10% in 2030, see also here.
Sources: Data centers and AI: How the energy sector can sate power demand | McKinsey, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The total addressable market for direct lending to large-cap companies in Asia is enormous. Eighty-seven percent of firms in Asia with revenue greater than $100 million are private, see chart below.
Note: For companies with last 12-month revenue greater then $100mn by count. Sources: S&P Capital IQ, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The number of new businesses created in the US has increased significantly since Trump won the election in November 2024, see chart below.
Sources: US Census Bureau, Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The chart below shows the biggest stock by market cap in the S&P 500, and it confirms the extreme AI concentration in the market today. Nvidia now has the biggest weight in the S&P 500 of any individual stock since the data began in 1981.
Sources: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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ISM Services Prices Paid for July shows that inflation pressures in the service sector are intensifying, pointing to upside risks to CPI inflation over the coming months, see chart below.
At the same time, employment growth is slowing down and the unemployment rate is rising.
The sources of this stagflation impulse are tariffs, deportations and the depreciation of the dollar.
This is a problem for the Fed. Should the FOMC focus on rising inflation and hike rates, or on slowing growth and cut rates?
The market is clearly expecting cuts, but the upside risks to inflation are significant, and investors should be carefully watching survey-based and market-based measures of inflation expectations.
The bottom line is that the stagflation theme in markets is intensifying.
For more discussion, see our mid-year outlook from June here.
Sources: Institute for Supply Management (ISM), US Bureau of Labor Statistics (BLS), Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Household formation could decline by 50% from 2024 to 2026 due to deportations and immigration restrictions, see chart below and the Daily Spark here.
A significant decline in household formations has important implications for consumer spending, housing demand and home prices.
Note: Household formation estimates for 2025 and 2026 are based on projected natural population growth and legal immigration. We assumed unauthorized immigration drops to zero. To reflect this, we used natural population growth plus 65% total net migration—based on CBO estimates and Migration Policy Institute’s estimates of 0.9 million rise in unauthorized immigrants in 2023—divided by the average US household size. Sources: Census Bureau, Haver, Apollo Chief Economist See important disclaimers at the bottom of the page.
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We expect that the Hong Kong dollar peg will hold. The Hong Kong Monetary Authority (HKMA) has large reserves to intervene, and the peg is a cornerstone of Hong Kong’s success as a global financial center.
But there are pressures on the Hong Kong dollar peg. After Liberation Day, the US dollar depreciated significantly. As a result, capital started flowing into Hong Kong, and the Hong Kong dollar appreciated so much that it reached the strong limit of the trading band relative to the US dollar.
In response, a few weeks after Liberation Day, the HKMA lowered Hong Kong interest rates to zero. As a result, there is now a significant gap between interest rates in the US and in Hong Kong, which is putting pressure on the peg because investors can now borrow in Hong Kong dollars and invest in US dollars, earning a significant return as long as the peg holds.
This has increased discussion among macro investors about the Fleming-Mundell policy trilemma, which says that a country cannot simultaneously have 1) a fixed exchange rate, 2) free capital movement and 3) an independent monetary policy.
The bottom line is that we expect the Hong Kong dollar peg to hold. But investors should be aware of the mounting pressures, as abandoning the peg would have significant implications for global markets.
We put together a chart book to understand this topic better, and it is available here.
Note: All references to Hong Kong refer to the Hong Kong SAR, China. Source: Apollo Chief Economist 
See important disclaimers at the bottom of the page.
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