With the US Supreme Court ruling Trump's reciprocal tariffs under an emergency powers law to be illegal, the aggregate tariff burden for the US has likely peaked. Even if the Trump administration is to introduce new tariffs based on other laws, these must be on a time limited basis, or will have to be narrowly specified based on the outcomes of administrative investigations or on national security grounds. It is not likely for the US to be able to find a legal basis for tariffs for every single partner that it trades with. Furthermore, Trump is not likely to introduce new tariffs on China following his much-touted US-China trade deal, and ahead of his highly publicised visit to China in March. By and large, the ruling should imply more limited US tariffs. But the impact on Asian credit, while positive, is likely to be small.

For one, Asian credit has already recovered its "Liberation Day" losses last year, with our Asian ex-Japan DACS index having compressed to a record low in late 2025. Thus, any positivity from a tariff reversal is likely to be small for credit markets, as investors have already looked past tariffs by now. Second, Asian credit market drivers are shifting from global factors to local factors. In Hong Kong, sentiment towards the real estate sector is improving with news of foreign institutional investors looking for deals. This has driven a sharp compression in Hong Kong real estate credit spreads, tariffs or not. In Indonesia, credit spreads are widening as investor sentiment is weighed by an MSCI review that could reclassify Indonesia as a frontier market instead of an emerging market. Domestic events could thus be the marginal driver for Asian credit now, not US tariffs.

DBS Aggregate Credit Spread or DACS indices show the aggregate credit spread, weighted by market capitalization and modified duration, for Asian corporate USD-denominated straight bonds. The higher is the DACS, the higher is the additional yield that can be earned in credit, and the higher is the perception of credit risks in markets.

Our first visual shows the notional outstanding of bonds from five Asian economies that comprise the Asia ex-Japan (AXJ) DACS index. These five economies are China, Hong Kong, Korea, India and Indonesia.

The second visual shows the notional outstanding split into industry sectors for the aggregate AXJ DACS index, and DACS indices for each of the five economies. Individual economies can be selected via the dropdown.

Our last visual illustrates the DACS index readings over time for AXJ or an individual economy. It is also possible to drill into the constituent sectors of the DACS indices using the second dropdown. Such sectoral DACS indices are shown on an individual economy basis when data is sufficient, and on an aggregated AXJ basis when otherwise.