US Direct-Lending Volume Falls to Three-Year Low Despite Record Fund-Raising

New data published 9 July 2026 highlighted a sharp divergence in the US private credit market. Direct lending by US private credit firms fell sharply in the second quarter even as fund-raising by such firms rebounded, underscoring the deviation between capital raised for the asset class and the deal flow to absorb it. US direct-lending volume fell about 55% quarter-on-quarter to $33.59 billion in the second quarter from $74.67 billion in the first — the lowest level since the second quarter of 2023, according to PitchBook/LCD data. By contrast, North America-focused closed-end direct-lending funds raised $16.25 billion in the quarter, up from $1.3 billion in the first quarter, according to Preqin data — the highest in two years. The shift follows increased scrutiny after defaults, concerns over software exposure and redemption pressure from retail investors in some semi-liquid vehicles, with the slowdown also reflecting softer M&A and buyout activity, borrower delays, and competition from the broadly syndicated loan market.

Source: Reuters / PitchBook/LCD / Preqin, 9 July 2026

HSBC Halts Lending to Riskier Private Credit Funds

HSBC Holdings Plc is halting lending to riskier private credit funds after high-profile corporate bankruptcies exposed shaky underwriting standards in the industry, the Financial Times reported. Europe's largest bank informed clients in recent weeks that it will not renew certain credit facilities or provide back leverage, citing people familiar with the matter. The move adds to a broader pattern of bank caution toward the sector: life insurers have grown allocations to private credit significantly, with the median portfolio allocation reaching 9% of total assets (up 110% since 2021), yet the quarter was characterised as one in transition — marked by selective large financings, redemption management, and evolving risk considerations.

Source: Bloomberg / Financial Times, 7 July 2026; Crowdfund Insider / PitchBook, 4 July 2026

Semiconductor Stocks Shed Over $1 Trillion Amid AI Spending Doubts

AI-linked chip stocks experienced a sharp multi-session correction through 8 July 2026. Semiconductor stocks saw a sharp downturn wiping out over a trillion dollars in market value as Wall Street questioned the sustainability of record AI capital spending; concerns include dot-com-era valuations, a hawkish Fed, and doubts about AI infrastructure returns. The Philadelphia Semiconductor Index fell 10.8%, the VanEck Semiconductor Index dropped 13% over ten sessions, and the iShares Semiconductor ETF declined 8% in a single week, with Reuters estimating roughly $1.3 trillion in semiconductor market value wiped out. On 9 July, however, markets staged a partial recovery: US stocks gained traction amid gains for chip producers and an improvement in credit conditions, with the S&P 500 rising 0.5% and the Nasdaq 100 gaining 1.3%. Sentiment towards AI-linked stocks was buoyed by strong demand for SK Hynix's US share offering, which was more than seven times oversubscribed.

Source: Forbes, 8 July 2026; Trading Economics, 9 July 2026

APAC Markets Volatile on Semiconductor Signals; KOSPI Circuit Breaker Triggered

Asian equity markets were buffeted by semiconductor-driven swings during the week. Asia-Pacific markets closed sharply lower on Tuesday 7 July, with South Korea's Kospi leading declines — falling 4.91% to 7,656. The Korea Exchange earlier activated a circuit breaker, pausing trading for 20 minutes, with the index at one point falling more than 8%. Japan's Nikkei 225 dropped 2.12% to 68,256 and the Hong Kong Hang Seng Index declined 0.51% to 23,496. Earlier in the week, sentiment had been more constructive: the Kospi had jumped 5.8% to 8,088 on reports that Anthropic is in talks with Samsung on a custom AI chip, while Hong Kong's Hang Seng rose 1.3% to 23,350, led by BYD (+6.5%), with mainland investors net buying HK$4.54 billion via Stock Connect.

Source: CNBC, 7 July 2026; Saxo Bank Asia Market Quick Take, 6 July 2026

Fed Holds at 3.50%–3.75%; Rate Hike Probability Rises for Later in 2026

The Federal Reserve's policy stance remained a central market variable heading into mid-July. The Fed kept the federal funds rate unchanged at 3.50%–3.75% for a fourth consecutive meeting in June 2026 — the first meeting under new Fed Chair Kevin Warsh. New economic projections show nine officials see at least one rate hike this year, with six anticipating at least two; nine others expected no move or a cut. Inflation projections were revised materially higher: the June 2026 Summary of Economic Projections placed PCE inflation at 3.6% for 2026, 2.3% for 2027, and 2.0% for 2028, against real GDP growth of 2.2% in 2026. Futures trading as of early July assigns a 0% probability to a rate cut at the July 29 meeting; the real debate is whether rates will hold or increase, with markets pricing a 74.9% probability of a hold and 25.1% odds of a quarter-point hike. At the ECB's Sintra forum, Chair Warsh noted that inflation risks have eased in recent weeks but stressed that delivering price stability remains the Fed's primary objective.

Source: Trading Economics / CME FedWatch, 8–9 July 2026; Forbes Fed Tracker, 8 July 2026; U.S. Bank Asset Management, July 2026

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