Tesla (TSLA) +2% Tesla shares bounced after a rough Monday, despite being down 36% in Q1 — the worst Q1 in company history. Investors are now eyeing its Q1 delivery report due Wednesday, with Street estimates hovering around 380,000 units . Analysts have been revising expectations lower amid backlash over Elon Musk’s role in Trump’s administration. Chinese EV Makers Up XPeng (XPEV) +1.6% : Delivered 33,205 vehicles in March — its fifth straight 30k+ month. NIO (NIO) +1.6% and Li Auto (LI) +1.4% also gained on strong March deliveries. Nvidia (NVDA) -0.6% Still under pressure after a 19.3% Q1 drop , its worst since 2022. Investor worries over AI spending, tech valuation, and trade tensions are weighing heavily. Johnson & Johnson (JNJ) -5% Fell after a Texas judge dismissed J&J’s third bankruptcy attempt to settle talc-related lawsuits via Chapter 11. PVH Corp (PVH) +18.9% Shares surged after Q4 earnings beat expectations ...
Key Takeaways for Investors:
Tariff Impact Hits Debt Markets: Auto bonds slumped on Thursday after President Trump imposed 25% tariffs on imported vehicles, set to start April 3. Yields widened as investor concerns over higher vehicle costs and potential profit erosion intensified.
VW & BMW Bonds Under Pressure:
Volkswagen’s 5.35% 2030 bonds, issued just last week, saw their spreads widen by 24 basis points to 135 bps.
BMW’s 5.4% 2035 bonds also weakened, with spreads rising 6 basis points to 122 bps.
Bonds from Honda and GM showed similar lagging performance.
Auto Debt Trails Broader Market:
Spreads on high-grade auto bonds have widened 26 bps YTD, more than double the 10 bps widening in the overall high-grade corporate bond market.
Automakers like Volkswagen, Toyota, Mercedes-Benz, and Hyundai are most exposed to rising funding costs.
Primary Market Cooling Off: French parts supplier Forvia SE had to raise yields to attract buyers in its first US-dollar junk bond sale. New bond issues from auto firms are failing to gain traction post-launch, a stark contrast to previous years where pricing often tightened after issuance.
What This Means for Investors:
The tariff shock is amplifying credit risk in the auto sector.
Caution is warranted for fixed-income investors exposed to carmakers, especially those with international production footprints.
Watch for further spread widening and potential downgrades if vehicle sales weaken significantly.
Investor Insight:
The tariff fallout isn’t just an equity story — bondholders are feeling the heat too. As funding costs climb and sentiment weakens, expect volatility in auto credit markets. For conservative portfolios, trimming exposure to this sector or rotating into less cyclical names could offer more stability in the months ahead.
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