Guggenheim CIO Says Credit Market is ‘Next Shoe to Drop’

August 11, 2023

by Emily Graffeo and Guy Johnson Yahoo! Finance

(Bloomberg) — While calls for a soft-landing are piling up on Wall Street, Anne Walsh is staying on the defensive.

[…] The chief investment officer of Guggenheim Partners Investment Management, which manages more than $225 billion, is hiding out in high quality bonds while bracing for lower quality parts of the credit market to get hit.

“I don’t think the market is really pricing in the next shoe to drop, and that’s credit,” she said on Bloomberg Television. “Recession seems to be off everybody’s mind, but I think that’s probably a mistake at this point in time.”

Walsh sees lower-quality borrowers at risk with the prospect of a higher-for-longer Federal Reserve and rising downgrades, defaults and bankruptcies.