What’s in store for bonds in 1Q 2021 as economies reopen?
1Q 2021 bond themes and potential opportunities as economies reopen.
Every quarter, our GFICC senior investors gather to formulate a consensus view on the near-term fixed income markets. The result of this is a strategy roadmap for the coming three to six months.
Our latest macro view
GFICC's scenario probabilities and investment expectations: 1Q 20202
It’s probably a stronger backdrop moving into 2020
EM PMI shows greater resilience over DM3
Where we believe the opportunities might lie4
Our GFICC team’s strategy bias has shifted from defensive towards taking calculated risks on expectations of a better growth outlook, still-accommodative policy, strong US consumption and stable fundamentals.
Commercial and agency MBS offer value versus credit6
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Overall, the global economy is bottoming out and recession risk could wane with a thaw in US-China trade tensions, alongside rounds of central bank rate cuts. While our GFICC team seeks to take measured risks in select fixed income sectors, we remain aware that it is late cycle and valuations are higher. Our GFICC team’s high-conviction bond ideas still generally favour moving up in quality to help build resilience in a portfolio.
Access Portfolio Insights Publication: Our latest global fixed income views
1. Source: J.P. Morgan Asset Management's GFICC Investment Quarterly (IQ). As of 11.12.2019. Opinions Estimates and forecasts may or may not come to pass. Provided for information only. These represent GFICC team’s views under normal market conditions subject to change from time to time.
2. Source: J.P. Morgan Asset Management's GFICC Investment Quarterly (IQ). As of 11.12.2019. Opinions, estimates, forecasts, projections and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. There can be no guarantee they will be met. Above-trend: Global gross domestic product (GDP) growth >3.5%, inflation >2%; Sub-trend: Global GDP growth 2-3.5%, inflation 0-2%; Recession: Global GDP growth <2%, inflation <0%; Crisis: A disorderly movement in markets causes systemic impact and tail risk. Provided for information only and not to be construed as investment recommendation or advice.
3. Source: J.P. Morgan Asset Management, J.P. Morgan, Bloomberg, Markit. As of November 2019.
4. For illustrative purposes only based on current market conditions, subject to change from time to time. Not all investments are suitable for all investors. Exact allocation of portfolio depends on each individual’s circumstance and market conditions.
5. Securitisation is the process in which certain type of assets, such as mortgages or other types of loans, are pooled so that they can be repackaged into interest-bearing securities. Examples of securitised debt include mortgage-backed securities (MBS) which are debt securities backed by mortgage-related financial assets. These assets include residential and commercial mortgage loans.
6. Source: J.P. Morgan (Morgan Markets); As at 13.12.2019. CMBS: commercial MBS. Indices used include Bloomberg Barclays US MBS Index (Agency MBS), Bloomberg Barclays Non-Agency US Aggregate CMBS Erisa Eligible Total Return Index (CMBS) and Bloomberg Barclays US Aggregate Credit – Corporate Investment Grade Index (US Corporate IG).
7. Yield is not guaranteed. Positive yield does not imply positive return. Past performance is not a reliable indicator of current and future results.
This content represents our GFICC team’s current view and overall strategy provided for information only based on current market conditions not taking into consideration any specific investor’s investment objective and risk appetite. Not to be construed as investment recommendation or advice.
The information provided is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Therefore, before you decide to buy any product or keep or cancel a similar product that you already hold, it is important that you read and consider the relevant JPMorgan fund Product Disclosure Statement (PDS), which is available to download on this website and make sure that the product is appropriate for you. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice. Issued by JPMorgan Asset Management (Australia) Limited ABN 55 143 832 080, AFSL No. 376919.