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David Kelly, the Fed, interest rates
In lower cost, liquid vehicles, alternative risk premia strategies can strengthen a risk-return profile.
What investors should consider
In this paper, we assess the potential risks associated with such a strategy by stressing capital requirements using spread-implied ratings.
We cut the chances of recession to 25% after a thaw in the trade war and a year of rate cuts; our forecast is for sub trend growth. Favored sectors include emerging market local currency debt and higher rated short-duration securitized credit.