NEW YORK, March 9 (Reuters) - Guggenheim Partners Global Chief Investment Officer Scott Minerd thinks the coronavirus-led market panic is likely to get worse.
Minerd said in an outlook paper on Monday that the firm’s models indicate that the 10-year Treasury note will reach minus 50 basis points before year-end and could “overshoot” to minus 2%.
On corporate credit, Minerd wrote that BBB bonds could “easily reach” a spread of 400 basis points over U.S. Treasuries and that high yield bonds “would follow suit,” with BB bonds at 750 basis points over and single B bonds at 1100 basis points over.
“Our estimate is that there is potentially as much as a trillion dollars of high-grade bonds heading to junk,” Minerd wrote.
On stocks, Minerd said technical analysis suggested support around 2,600 on the S&P 500 Index, with a recession scenario closer to 2,000.
Minerd, a member of the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets, quoted Winston Churchill about whether the virus-related market panic would end soon: “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
Reporting by Lawrence Delevingne; Editing by Dan Grebler