Oil's 18.9% Drop Barely Moved Funding Markets

Based on the indicators reviewed, the tariff-driven crude collapse has not migrated into working-capital credit. WTI dropped from $72.12 on Apr 2 to a $58.50 low on May 5, an 18.9% drawdown, yet front-end funding gauges retraced their April widening over the following months and credit spreads compressed below pre-shock levels. Three-month nonfinancial commercial paper rates rose just 16 bp at the peak before falling back, EFFR held at 4.33% without a single tick of variation, and broad high-yield OAS stood at 2.84% on Sep 10, fully 58 bp tighter than the Apr 2 starting point ([FRED BAMLH0A0HYM2]fred.stlouisfed.org).

The evidence:

- 3M financial CP peaked at 4.39% on Apr 15, a 13 bp rise from 4.26%, then retraced to 4.19% by Sep 5. Nonfinancial CP followed the same arc: 4.24% to 4.40% and back to 4.17%, though the nonfinancial series has sparse prints in Aug and Sep ([FRED DCPF3M]fred.stlouisfed.org; [FRED DCPN3M]fred.stlouisfed.org). - SOFR stayed in a 4.26% to 4.45% range across the Mar 25 to Sep 10 window, with the Jun 30 high attributed to quarter-end reserve dynamics, not credit stress ([FRED SOFR]fred.stlouisfed.org).

Behind the paywall: the overnight A2/P2-to-AA quality spread that briefly doubled in April, the role of the Sep 18 Fed cut in compressing spreads, the decline in commercial paper outstanding, and the specific print that would signal the commodity shock has finally reached working-capital plumbing.