Insights Now

Finding income for global investment portfolios

In today's episode, Dr. David Kelly is joined by Phil Camporeale, portfolio manager in our Multi-Asset Solutions group at JP Morgan Asset Management. Phil manages portfolios with a global opportunity set, and in doing so is actively making decisions on how to allocate the pieces of the pie within portfolios. What's the optimal mix of stocks versus bonds? And then how do you allocate within those sleeves? Where can you get the best bang for your buck in terms of returns, while also managing risk in portfolios amidst an uncertain macro outlook? These decisions largely depend on relative valuations, the outlook for interest rates and growth, and the relative attractiveness of yields. In this episode, we’ll hear form Phil on how he’s shifting the dials in portfolios right now, and the slice he's allocated to fixed income.

The muni landscape heading into a downturn

After significant monetary tightening over the last year, the Federal Reserve has now hiked rates all the way up to a range of 5-5.25%, but this tightening cycle may finally be at a close. With elevated risk of a near-term recession, markets are now expecting the Fed to pivot to rate cuts before the end of the year. For investors, an environment where economic conditions are looking precarious, and rates may soon be headed downwards, an active approach towards fixed income exposure is particularly important. On today's episode, we're going to focus on municipal bonds, which may be an effective way for investors to access high-quality and attractive tax-exempt yields in portfolios, particularly when heading into a downturn. To discuss this, Dr. David Kelly is joined by Richard Taormina, a portfolio manager for several municipal bond strategies here at JP Morgan Asset Management.

For more insights on the Guide to the Markets, visit the link here. ​

Credit vs. Duration, where should you spend your risk budget?

So far this year, investors have had to contend with the implications of a regional banking crisis, a still-hawkish Fed, and rising expectations for a near-term recession. With economic risks elevated, the challenge for debt investors is to strike the right balance between risk and return in portfolios, while maintaining a focus on credit quality. These two risks – interest rate risk and credit risk – can have important implications for bond performance in an environment where the Fed may soon pivot to rate cuts, but likely in response to a U.S. recession. On today's episode, Dr. David Kelly is joined by Andrew Norelli, Portfolio Manager for several multi-sector fixed income strategies here at J.P. Morgan Asset Management, to dive into the outlook for the economy and interest rates, and what this all means for striking the right balance between credit and duration in fixed income portfolios.

 

Navigating the opportunities in global bonds​

So far this season, we've talked about the bond market from a number of different angles and in this episode we look at fixed income as a global asset class. In our recently launched 2Q23 Guide to the Markets, we have a chart that shows that the majority of global debt is international, with the U.S. share accounting for less than 40% today. Moreover, divergent central banks and brighter growth prospects overseas paint a different fundamental landscape than that of U.S. fixed income assets. On today's episode, Dr. David Kelly is joined by Iain Stealey, International Chief Investment Officer within the Global Fixed Income, Currency and Commodities (GFICC) group, to dive into the outlook for global monetary policy and what this means for opportunities in international bonds.

 

Access the Guide to the Markets here. For more resources visit the On the Minds of Investors webpage. ​

The regional bank crisis and its implications for bonds

Plenty has happened over the last few weeks—Silicon Valley Bank collapsed, Credit Suisse was taken over by UBS, and several other pressures emerged among regional banks. These events and their implications for credit conditions and monetary policy have sent markets through a series of twists and turns and raised questions about the risk of a US recession later this year. On this episode, Dr. David Kelly is joined by Kelsey Berro, Portfolio Manager on our Global Fixed Income, Currencies and Commodities Group, for a discussion on these issues and how it's shaped both the outlook going forward and the fixed income landscape.

 

 

Finding direction in fixed income

This episode dives into positioning within fixed income. Dr. David Kelly is joined by Bill Eigen, portfolio manager for an unconstrained fixed income strategy at J.P. Morgan Asset Management. Bill offers a unique perspective, as his fund uses an opportunistic go-anywhere strategy that aims at delivering positive returns – no matter what’s happening in fixed income markets. In today’s particularly uncertain macro environment, Bill offers important insights on where he’s seeing opportunities, what areas he’s steering clear from and his latest thoughts on the markets and economy.

For more insights, tune into the Notes on the Week Ahead podcast and follow David Kelly on LinkedIn.

 

 

Are bonds really back and for how long?​

This episode kicks off our sixth season of Insights Now, entitled a “A Bond's Eye View", and we've decided to center this season around fixed income. Over the course of this season, Dr. David Kelly will sit down with slate of market strategists and portfolio managers to discuss the outlook for the Fed and other global central banks, the outlook for the dollar, diversifying within fixed income and how to think about bonds when positioning long-run investment portfolios.

On this episode, Dr. David Kelly is joined by Jordan Jackson, Global Market Strategist at J.P. Morgan Asset Management, to discuss the outlook for the Fed and opportunities within fixed income.

For more insights on fixed income investing, please visit our latest piece Bonds are Back. ​

Will 2023 be a year of slow growth, but better markets?

As we plan for our next season, please provide your thoughts and any suggestions on our podcast. You can reach out to our team, Market Insights, at mi.questions@jpmorgan.com.

2022 has been a brutal year for investors, with unusually large sell-offs in both stocks and bonds resulting in one of the worst years ever for balanced investing. However, 2023 may be the calm after the storm of this year, with markets stabilizing, inflation receding and the Fed nearing the end of its tightening cycle. Moreover, precisely because markets have been so battered, lower equity valuations and higher bond yields present some of the most attractive entry points for investors in over a decade.

On our last episode of this season, I am joined by Jack Manley, Global Market Strategist at J.P. Morgan Asset Management to discuss the key takeaways from our Investment Outlook for 2023 and the importance of asset allocation in a challenged environment.

Bonds are back

Tune in to hear Dr. David Kelly and Bob Michele, CIO and Head of the Global Fixed Income, Currency & Commodities group, discuss the outlook for fixed income and how investors can take advantage of opportunities.

Higher rates and rising inflation have created a particularly challenging environment for bonds this year, with the U.S. Agg. down a whopping 13% year-to-date. However, the selloff has also brought valuations down to their most attractive levels in years, and the backup in yields means bonds can once again provide investors with a reliable source of income and diversification. While economic uncertainties remain about the timing of a Fed pivot and the potential for U.S. recession, the case for bonds is as strong as it's been in over a decade.

 To discuss the outlook for fixed income markets and how investors can take advantage of these opportunities, Dr. David Kelly is joined by Bob Michele, CIO and Head of the Global Fixed Income, Currency & Commodities group, at JP Morgan Asset Management.

The Implications of Divided Government

Earlier this month, Americans went to the polls for the midterm elections. While some were expecting a red wave, what resulted was more of a red ripple with Republicans garnering a slim majority in the House and Democrats likely maintaining control of the Senate. In today's politically polarized climate, divided government means gridlock, and as the country grapples with high inflation, the potential for recession and heightened geopolitical tensions, this will have important implications for the kind of government action or lack thereof, we may see over the next two years. 

On this episode, I am joined by Michelle Mesack, Head of Federal Government Relations at JP Morgan Chase with extensive experience in government and public policy, as well as my colleague Meera Pandit, Global Market Strategist at J.P. Morgan Asset Management, to discuss the main takeaways for investors from the midterm elections.