Still, Goldman Sachs Group Inc. strategists joined a growing chorus warning that credit markets are not sufficiently pricing in recession risks, calling investors “complacent.” The New York-based bank added its voice to calls from PGIM and JPMorgan Asset Management flagging the upward risks to yield premiums in credit as the chances of recession in the US mount.
The euro area’s top two economies worsened in October, with the downturn in Germany intensifying and France failing to grow for the first time in 19 months. Meanwhile S&P Global’s survey of UK private sector purchasing managers fell below the reading economists had expected and deeper into territory indicating a contraction.
“We are going through a tough period of economic activity and this could lead to rising default rates,” Ross said. “While we continue to see upgrades within certain sectors, the ratings outlook will absolutely deteriorate given the growth outlook.”
This article was provided by Bloomberg News.