High interest rates begetting a recession was one reason many money managers were bullish on bonds after a bearish 2022. While the economy continues to run hot and a recession may not arrive, some suspect a bond bull market is still ahead.
Bearish markets for both bonds and equities in 2022 certainly didn’t instill confidence for investors. However, the general American populace may be changing their views when it comes to the economy.
A CBS News article noted that sour views on the state of the economy may be steadily decreasing and the threat of a recession may be fading into the background. However, some money mangers remain steadfast with their bullish bond views.
“We don’t think this time it’s different,” said Bob Michele, CIO for fixed income at J.P. Morgan Asset Management, in Fortune magazine. “But from that first rate hike until recession could take a while. We continue to see a growing list of indicators which are only at these levels if the US economy is already in recession or about to enter recession.”
Additionally, some are opting to stick with long duration while the default play the past few years has been short-term bonds to mitigate rate risk. Nonetheless, certain money managers think that rate hikes position the long end of the yield curve for future strength as rate hikes subside.
“We don’t think we’re going to be wrong,” said Mike Riddell, a portfolio manager at Allianz. “We’ve remained long duration. We do not believe all the monetary tightening will not have any impact on growth.”
