Goldman Sachs strategist: The hidden spread risk in the US credit market is worrying.

Goldman Sachs Group said that strong demand from pension funds and insurance companies will support corporate bonds, shielding them from the impact of macroeconomic headwinds and record issuance levels. "Despite the situation becoming undoubtedly more challenging, spreads have narrowed to pre-war levels," said Amanda Lynam, chief credit strategist at Goldman Sachs, in a Bloomberg Credit Edge podcast. "This is the unsettling tension in the credit market at the moment." In addition to rising fuel and other input costs due to the Iran war, U.S. companies also face risks such as high inflation, rising debt financing costs, consumer pressure, and slowing U.S. economic growth. At the same time, the supply of investment-grade bonds is expected to reach historic highs this year. Goldman Sachs estimates that pension funds and insurance companies hold over $6.4 trillion in U.S. corporate credit bonds, accounting for approximately 40% of the market. Lynam stated that corporate pension funds are currently at their highest funding levels since 2007 and may increase their holdings of high-quality credit bonds. In addition, she pointed out that insurance companies are 10 percentage points lower in their allocation to fixed-income assets compared to 2010, indicating they still have room to increase their holdings.