Guggenheim warns Davos investors to expect softer U.S. returns in 2026

Guggenheim Partners’ investment managers warned investors at the World Economic Forum in Davos that returns across U.S. assets — equities, bonds and the dollar — are likely to be softer in 2026 than they were in 2025. Speaking to attendees on Jan. 20, the firm singled out two structural pressures that it said could weigh on returns next year: heavier new issuance in credit markets and evolving patterns of sovereign flows.

The managers argued that a glut of new corporate and sovereign debt issuance would apply downward pressure on credit spreads and curb returns for fixed income and credit-sensitive assets. At the same time, they said changes in how sovereign investors allocate capital could diminish an important bid for U.S. assets, leaving markets more exposed to domestic demand and policy-driven swings.

Those supply- and demand-side dynamics were highlighted against a risk-sensitive backdrop in Davos. European equities traded lower as delegates mulled tariff threats and geopolitical uncertainty, with the STOXX Europe 600 recording its biggest two-day drop in two months as investors sought signals about policy, trade and geopolitics. Market participants at the forum were watching closely for policy cues that could trigger larger moves if rhetoric intensified, a point underlined by analysts who noted that U.S. President Donald Trump was scheduled to speak the following day.

Guggenheim’s caution dovetails with other investor positioning discussed during the WEF week. Macro strategists and alternative managers flagged rising volatility and hedged exposures; one business-category report noted SkyBridge positioning that was cautiously optimistic on bitcoin amid a broader bet on volatility. Corporate developments also contributed to market texture: a regulatory filing indicated Berkshire Hathaway may shed a 27.5 percent stake in Kraft Heinz, and United Airlines offered an upbeat outlook on premium travel demand and the resilience of its loyalty business.

For investors, Guggenheim’s message amounts to a call for recalibration. After a period of relatively strong returns in 2025, heavier supply in credit markets could lower prospective yields and total returns on fixed income, while shifting sovereign demand could reduce the foreign bid that has supported U.S. Treasury and dollar valuations in past cycles. That combination tends to increase sensitivity to macro news and policy shifts, raising the likelihood of bouts of volatility.

Policy implications are notable. If issuance is the central constraint, tighter coordination between fiscal planners and markets could be required to smooth supply; if sovereign flows are the driving force, central bank and geopolitical developments that affect reserve allocations will matter more for market stability. In either case, investors are likely to price in a more cautious return regime for 2026, adjusting duration, credit exposure and currency hedging accordingly.

Guggenheim’s warning at Davos underscores a broader recalibration of expectations among asset managers as they weigh structural issuance trends and evolving global flows against an uncertain geopolitical landscape.