Guggenheim warns US asset returns to soften in 2026: US bonds, equities face lower returns
Guggenheim sees positive but lower US asset returns in 2026 as heavier supply and weaker foreign inflows weigh on bonds, equities and the dollar. Info via a Reuters interview. Summary:Guggenheim expects softer returns across US assets in 2026.Rising credit issuance may widen US bond spreads modestly.Higher rates allow opportunistic borrowing, boosting supply.Foreign investors are reallocating away from US assets.Equities and the dollar face headwinds despite positive fundamentals.Guggenheim Partners Investment Management is warning that returns across major US asset classes are likely to moderate in 2026, as heavier issuance, shifting foreign capital flows and a less supportive policy backdrop weigh on bonds, equities and the dollar.The asset manager expects a steady rise in US credit supply to place modest upward pressure on spreads this year. Steven Brown, Guggenheim’s chief investment officer for fixed income, said markets have already absorbed close to $300bn in US investment-grade issuance, aided by issuers’ ability to time deals opportunistically rather than borrowing out of necessity.Brown noted that while interest rates have stabilised, they remain well above levels seen for much of the past decade. That environment has encouraged companies to issue when market conditions allow, contributing to higher overall supply. As a result, credit fundamentals remain broadly constructive, but incremental issuance is likely to cap upside for spread tightening.Guggenheim argues that monetary policy is no longer the dominant driver of fixed-income performance, with supply dynamics and investor demand playing a more prominent role in shaping returns.The firm also flagged growing headwinds for US equities and the US dollar, pointing to signs that foreign investors are reallocating capital toward non-US opportunities. Anne Walsh, Guggenheim’s chief investment officer, said sovereign investors that previously favoured US Treasuries have increasingly shifted allocations toward gold, silver and other alternative assets, a trend that also weighs on the dollar.The more cautious outlook follows a strong 2025, when easing by the Federal Reserve and a resilient US economy delivered the strongest market returns since 2020. Heading into 2026, investors are reassessing whether a slower-moving Fed and looser fiscal policy can sustain that momentum.While Guggenheim’s base case still calls for positive returns across asset classes, the firm expects performance to fall short of last year’s levels, as supply-demand imbalances and softer foreign inflows limit upside. Not just politics. This article was written by Eamonn Sheridan at investinglive.com.
