Deutsche Bank Predicts Rising Default Rates Amid Fed's Delayed Rate Cuts

According to BlockBeats, Deutsche Bank strategists have indicated that the U.S. Federal Reserve's decision to delay interest rate cuts will lead to increased borrowing costs, impacting American businesses. The bank noted that while hopes for a soft landing have resulted in most defaults occurring through distressed asset exchanges with higher recovery rates, the likelihood of a soft landing is diminishing due to inflation exceeding targets, significant policy uncertainty, and rising sovereign term premiums. Deutsche Bank forecasts that default rates in speculative-grade credit could reach 5.5% by mid-next year, marking the highest issuer-weighted speculative-grade default rate since 2012.