Priya Misra, fixed income securities portfolio manager at JPMorgan Asset Management, commented on the US economy, interest rate outlook, and bond markets on the Squawk Box program on CNBC.
Misra stated that current interest rates remain restrictive, saying, “I think the Fed will continue to gradually cut interest rates. There are differing opinions on where the neutral interest rate level is, but market data will guide the Fed.”
Misra emphasized the strength of corporate balance sheets and the structurally sound environment, but noted that customs duties and high interest rates create cyclical pressure on growth. Therefore, he argued that investors should create diversified portfolios: “Fixed-income assets provide both returns and protection against a slowing economy.”
Misra also shared his expectations for the bond market, stating that medium- and long-term, high-quality corporate bonds appear attractive, but caution is exercised against lower-grade, high-yield bonds. Misra noted that the US economy is still performing relatively strongly on a global scale, adding, “We need to hedge the US rather than sell it.”
Misra noted that uncertainties regarding the labor market persist, adding that customs duties and possible government shutdowns could put pressure on employment, and that the Fed is therefore cautious about downside risks to employment.
*This is not investment advice.