JPMorgan AM Sees Bond Rebound as Oil Tops $116 and Yields Near 5%
JPMorgan Asset Management’s fixed-income team warns that prolonged conflict in Iran and oil above $116 per barrel could trigger an economic slowdown investors have overlooked. US Treasury market suffered its worst monthly loss since October 2024 as yields jumped toward 5%, prompting managers to forecast a bond-market rebound.
1. Bond Managers’ Slowdown Warning
JPMorgan Asset Management’s fixed-income portfolio manager highlights the risk that ongoing conflict in Iran may inflict a sharper economic slowdown than current market pricing reflects. Managers at Pimco and Columbia Threadneedle share concerns that elevated geopolitical tensions could tip the economy into contraction.
2. Oil Prices and Treasury Losses
US oil prices have climbed above $116 per barrel, fueling expectations of higher costs across the economy. This energy shock has driven the US Treasury market to its deepest monthly loss since October 2024, with two- and five-year yields jumping over half a percentage point since late February.
3. JPMorgan Asset Management’s Outlook
With yields near 5% on 30-year notes and benchmark 10-year yields at 4.40%, JPMorgan’s team argues that bond valuations have become attractive. Managers anticipate that economic headwinds will eventually force yields lower, triggering a rebound in bond prices.
4. Implications for Federal Reserve Policy
Economists have increased recession odds to around 30–35% as higher energy prices, borrowing costs and market volatility squeeze consumers and businesses. This pessimism could raise the likelihood of future rate cuts if the Fed prioritizes growth concerns over inflation persistence.