Explore core fixed income insights from our portfolio managers and research analysts.
It is often highlighted that spreads are tight versus historical levels; on a 10-year lookback, current spreads are at around the 14th percentile. However, we believe these spreads are reflective of the strong fundamentals that corporates have been exhibiting and do not see any substantial signs of fundamentals deteriorating post the Q2 earnings season.
We believe spreads could, in fact, move significantly tighter from here if central banks are able to successfully navigate a soft landing (which is our base case). Using a shorter lookback period to June 30th 2020, spreads are closer to their 30th percentile and we are seeing a significant amount of spread dispersion across sectors and through time.
Our Global Credit strategy continues to take advantage of: (1) spread dispersion across sectors by increasing allocations to sectors where we see further tightening potential, like banks and utilities, and reducing in areas that we believe are facing headwinds, like autos and retail; (2) spread dispersion through time by actively managing the strategy’s top-level risk positioning in anticipation of broader-based spread movements. For example, we reduced risk into August in anticipation of seasonal volatility and were later able to add back that risk at more favourable levels post the spread widening in early August. We currently have an overall overweight to duration times spread, reflecting our view that spreads can move tighter and duration should outperform as the rate cutting cycle begins.
Portfolio Manager,
Global Fixed Income, Currency & Commodities
Investment Specialist,
Global Fixed Income, Currency & Commodities
Global Aggregate Corporates
Find out how we’re positioning our core fixed income portfolios, based on our latest economic and market views.
Attractive yields and resilient corporate fundamentals are creating compelling opportunities in euro investment grade (IG) corporate bonds. We believe our JPMorgan Funds – Euro Corporate Bond Fund, with its focus on active security selection, is well positioned to drive alpha generation in this market.
Research-driven security selection and disciplined risk management are at the heart of our fixed income portfolio building blocks. Download a chart pack or explore the fund for more information.
For further information about any of the funds featured above, or any of our fixed income range, please contact your local representative.
For investors evaluating portfolios as bond market conditions evolve, J.P. Morgan Asset Management offers fixed income solutions that span the risk spectrum, underpinned by the deep resources and rigorous research of a truly global platform.
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