Corporate borrowers in a number of sectors are recovering faster than expected, boosted by the strong economic rebound and reaping the benefits of pent-up consumer demand. Still, it could take until well into next year for some sectors to recover to 2019 credit metrics; the outlook is further complicated by the recent resurgence of COVID cases and the potential reinstatement of some social restrictions. As the focus turns to corporates’ financial policies, we expect increases in M&A and capex in most U.S. sectors as companies reposition their business models to address shifts in consumer and corporate behavior triggered—or accelerated—by the pandemic. We continue to believe the jump in inflation will be transitory, but a prolonged period of rising prices would pose downside risks for many borrowers.