Deutsche Bank: Long-term high interest rates could hit U.S. corporate borrowers

 Deutsche Bank's strategist wrote that as the impact of the Fed's delay in rate cuts further expands in the future, higher borrowing costs will have an impact on US companies. Deutsche Bank wrote: Currently, the anticipation of a soft landing has led to most defaults appearing in the form of bad asset trades, with higher recovery rates. However, against the backdrop of inflation higher than the target, severe policy uncertainty, and a continuous rise in sovereign term premiums, the possibility of a soft landing is decreasing." Deutsche Bank believes that in speculative-grade credit, default rates could reach as high as 5.5% by mid-next year, meaning that the issuer-weighted speculative-grade default rate will reach its highest level since 2012.