JP Morgan bond manager sees strong economy, can handle higher rates, 10yr could get to 6%

Bloomberg (gated) has the report on the manager of US$8.8 billion JPMorgan Strategic Income Opportunities Fund.

In brief:

  • As of the end of August, 63% of the portfolio was in cash-like instruments
  • the rest is primarily in short-dated, floating-rate investment-grade debt
  • Eigen’s view on the economy, informed by the thriving business at an athletic facility he owns in Rhode Island, tells him bond investors are in for more pain. As he sees it, the Federal Reserve may raise interest rates at least once more, and keep them there for as long as 18 months to slow the economy and curb inflation. As a result, he says, it’s possible that 10-year yields, which on Wednesday hit a 16-year high of almost 4.9%, may reach 6%, a level last seen in 2000. What bond bulls fail to realize is that “this economy is stronger than they think and can deal with higher rates better than they think,” he said.

Bolding above is mine.

This article was written by Eamonn Sheridan at Source