Bond Bulls at JPMorgan, Allianz Double Down on a Bet Gone Bad

Convinced a recession in the US was near, some of the world’s most prominent money managers loaded up on government bonds this year in a bold bet that would atone for the punishing losses suffered in 2022.

That strategy is now misfiring once again, saddling them with subpar returns and testing their resolve as the selloff deepens week after week.

The past week was especially painful. The annual return on US government bonds fell into the red as Treasury yields flirt with a 15-year high, reflecting the view that interest rates may be elevated for years to come — and that the economy will be able to sustain it.

And Treasuries began this week on the back foot once again with benchmark yields pushing higher on Monday.

Bob Michele, one of the most outspoken bond bulls, is undeterred. The CIO for fixed income at J.P. Morgan Asset Management, who correctly predicted the slide in Treasury yields “all the way down to zero” from 2% in 2019, says now his strategy is to buy every dip in bond prices.

The firm’s flagship Global Bond Opportunities Fund is down 1.5% over the past month and beating just 35% of peers so far this year, compared with 83% over the past five, according to data compiled by Bloomberg.