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January 17, 2019

Guggenheim Investments’ Top 10 Macroeconomic Themes for 2019

NEW YORK – Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today provided its 10 Macro Themes for 2019.

Among the major themes cited:

  • With economic growth set to slow and with financial conditions having tightened, the Federal Reserve will likely pause its rate hikes to start 2019 in order to stabilize markets.
  • The combination of a Fed pause, decent earnings growth, and a modest recovery in price/earnings multiples will likely push the S&P 500 Index to new highs.
  • A more dovish Fed will encourage more debt accumulation and allow excessive leverage to become more pronounced.
  • Even as the Fed slows the pace of rate hikes, the labor continues to be strong. With job gains likely to further exceed labor force growth, unemployment is likely to fall even lower in 2019. We expect the Fed will raise rates twice in 2019 to try to cool the labor market.
  • Given the strong relationship between the 10-year Treasury yield and the market pricing of the terminal fed funds rate, our forecast of two Fed rate hikes in 2019 suggests the 10-year Treasury yield will rebound to 3.15 percent.
  • Business capital expenditures and consumption of homes, autos, and appliances will all feel the effects of rising rates in 2019. We see a broad-based slowdown in real GDP growth to below 2 percent year over year by the fourth quarter of 2019.
  • Our recession model is signaling relatively low recession risk in the next 12 months, however we continue to expect a recession will begin in 2020, as a historically tight labor market forces further tightening by the Fed, pushing the overleveraged corporate sector into a downturn.
  • With a recession likely to begin in 2020, we expect that spreads will be wider by the end of 2019. The most pronounced widening would occur in the high-yield sector.
  • Given significantly higher borrowing costs, a seizing up in the flow of credit to leveraged borrowers, and a likely tightening of bank lending standards, we expect the high-yield default rate to climb in 2019.
  • The U.S. political climate has become more polarized under President Trump than at any point in the post-war period, which will result in legislative gridlock. Battles over the budget, trade issues, the debt ceiling, and investigations into the Trump administration will undermine confidence and weigh on the markets.

For more information, please visit www.guggenheiminvestments.com.

About Guggenheim Investments

Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with more than $207 billion¹ in total assets across fixed income, equity, and alternative strategies. We focus on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Our 300+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled us to deliver innovative strategies providing diversification opportunities and attractive long-term results.


Media Contact

Gerard Carney
Guggenheim Partners


1Guggenheim Investments assets under management are as of 9.30.2018. The assets include leverage of $11.8bn for assets under management. Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Real Estate, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited, and Guggenheim Partners India Management.

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This material contains opinions of the author or speaker, but not necessarily those of Guggenheim Partners, LLC, Stanford Global Projects Center, or the World Wildlife Fund. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.

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