Likelihood of a recession climbs, UBS Group says

The chance of a U.S. recession next year is the highest it has been since the credit crisis, and that could spark record defaults among high-yield companies, according to UBS Group.

There is a 34 percent likelihood of a recession by the first quarter of 2017, according to the UBS credit-based recession probability index, and those chances could jump to 50 percent next year if the Federal Reserve raises interest rates at a rapid pace.

As banks tighten lending standards, the prospect of the Fed raising rates amid weak economic growth could create conditions similar to last year, when junk bond investors suffered their first loss since 2008, UBS strategist Stephen Caprio said Tuesday.

Bloomberg News

This story was originally published June 7, 2016 at 2:29 PM with the headline "Likelihood of a recession climbs, UBS Group says."