Banking titan JPMorgan Chase believes calls for ‘Sell America’ are unfounded as the US continues to display economic exceptionalism.
In a new CNBC interview, Priya Misra, JPMorgan Asset Management fixed-income portfolio manager, says investors are pouring funds into fixed-income securities, which are assets that allow lenders to generate predictable interest along with the return of capital once the investment matures.
Misra says investors are shifting into fixed-income securities not to exit US assets, but to diversify and shield against economic risks.
“Think about fixed income. Fixed income is giving you income, and it’s giving you diversification. If the economy slows down, if those cyclical aspects I talked about, higher interest rates, this low-fire, low-hire labor market turns into a starting-to-fire labor market, the Fed’s going to be aggressive. They’re going to cut rates. You get that diversification. If you have the AI trade on, have something that will hedge, something that, if things slow down, what will work? Fixed income will work. So that’s why we’re seeing flows into fixed income.
I think there was concern a few months ago, ‘sell America.’ No, there was some hedge America. There’s no sell America. The US is still outperforming on a growth standpoint.”
She also believes that the current interest rate environment is restrictive and that the Fed will continue to cut rates in the coming months.
“But I do think the Fed, where Fed funds rates are, they’re going to still cut in October. I think they’ve told us that they’re going to gradually get to neutral… But for now, we’re at 4.25%. So I think they’re going to continue to gradually cut rates.”
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