Guggenheim warns of softer returns across US assets in 2026

By Divya Chowdhury and Mehnaz Yasmin

DAVOS, Switzerland, Jan 20 - A flood of new issuance is likely to widen U.S. bond spreads modestly in 2026 while U.S. equities and the dollar will bear the brunt of weaker foreign inflows, fund managers at Guggenheim Partners Investment Management said.

"This year we're likely to see a little bit more supply of credit, which could put some modest pressure on credit spreads," Steven Brown, chief investment officer for fixed income at Guggenheim Partners Investment Management, told the Reuters Global Markets Forum.

Markets have already absorbed nearly $300 billion in investment-grade supply this year, helped by issuers' flexibility on timing, Brown said while attending the World Economic Forum's annual meeting in Davos, Switzerland.

While rates have stabilized, they are still higher than much of the past decade, allowing companies to issue opportunistically rather than out of need, he added.

That has created a generally more constructive backdrop for investors, with monetary policy no longer the main driver of the asset class.

In lockstep with bonds, Guggenheim also warned of headwinds for U.S. equities and the dollar, as investors steer capital to more lucrative non-U.S. assets.

"We've certainly seen sovereign nations that previously invested, say for example in U.S. Treasuries, move money into gold, silver and other precious metals or into other alternative investments, which then also has an impact on the currency," said Anne Walsh, chief investment officer of Guggenheim Partners Investment Management.

The cautious outlook follows a strong 2025, when Fed easing and a resilient economy delivered the market's best returns since 2020. Now, investors are gauging whether a slower-moving Fed and easier fiscal policy could stall that momentum and weigh on total returns.

While the fundamental story is a good one, supply and demand from foreign flows might weigh on returns, Guggenheim's fund managers said.

"I think it's going to be a good year for returns for everything, as is our base case, but returns are probably going to be a little bit lower than they were last year," Brown said.

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