JPMorgan: Fixed Income a Once-in-a-Generation Buy at 6.5% — SkimNews
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- Priya Misra of JPMorgan Asset Management called high-quality fixed income a "once in a generation opportunity," noting investors can earn a 6.5% yield from top-rated companies without moving down in credit quality.
- Misra framed fixed income as a hedge against concentrated equity exposure, saying bonds offer "this diversified set of returns" spanning Treasuries and credit outside of the AI and tech trades that dominate stocks.
- The JPMorgan Core Plus Bond Fund ETF (JCPB), which Misra co-manages, holds roughly $16 billion in assets with over three-quarters of its portfolio in BBB-rated debt or higher as of Aug. 31.
- JPMorgan has been adding double-B and single-B exposure as high-yield spreads widened, and has "in the last few days" started increasing duration as the firm sees a possible end to the rate-hiking cycle.
- JCPB is down more than 5% year-to-date as of Friday's close per FactSet, while BondBloxx's Private Credit CLO ETF (PCMM) is down 0.6% over the same period.
- BondBloxx co-founder Joanna Gallegos echoed the bullish case, telling CNBC corporate debt yields are "historically attractive" because high base rates are stable and corporate fundamentals remain strong.
- Misra urged bottom-up, bond-by-bond analysis to avoid over-leveraged issuers and flagged concern that higher rates could damage the housing market.
Why it matters: JPMorgan and BondBloxx are recommending that investors stuck in an AI-driven equity rally use high-grade credit as a diversifier locking in 6.5% yields, with the call landing as the bank adds lower-rated and longer-duration positions on the view that the rate cycle is nearing its end.
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