Implications for Fixed Income Investors
In portfolios, our preference is for long European duration at the front end of yield curves, where some value was created after a sharp initial sell-off in response to the Iran conflict. However, while a negotiated settlement in the Middle East seems perpetually within touching distance, inflation has begun to reaccelerate and there are risks to long duration positions across most developed markets. Our base case is that the Fed will remain on hold in the near-term. Still, investors should exercise caution on US duration, as downside risks to the labour market have dissipated, with policymakers poised to eliminate the Fed’s easing bias in favour of a neutral stance, which would indicate a more balanced approach to monetary policy risk.
About the Bond Bulletin
Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.
Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.