Higher borrowing costs will hit US companies as the impact of the Fed's delayed rate cuts widens further into the future, Deutsche Bank strategists wrote. Deutsche Bank wrote: Currently, the expectation of a soft landing has led to most defaults in the form of non-performing asset exchanges and higher collection rates. But in the context of above-target inflation, high policy uncertainty and rising sovereign term premiums, the likelihood of a soft landing is declining. "Deutsche Bank believes that in speculative-grade credit, the default rate could reach as high as 5.5% around the middle of next year, implying that the issuer-weighted speculative-grade default rate will reach its highest level since 2012.