JP Morgan’s top equity strategist said investors should buy more government bonds to prepare for a possible recession later this year. Investors are increasingly abandoning their defensive stance as more market participants hope for a soft-landing scenario for the economy. It follows a strong start to the year, with the Nasdaq Composite Index rising more than 30% to its best first half since 1983. But JP Morgan’s Marko Kolanovic said investors were wrong and expect a continued year-end recession. his basic outlook. He recommended investing more in government bonds to prepare for future risks. “This benign, complacent pricing of recession risk and growing signs that a credit cycle is brewing has made us more negative on corporate bonds,” Kolanovic said in a letter to clients Monday. , will be more positive for government bonds.” “Therefore, we reduce the allocation to credit by shifting 2 percentage points from corporate bonds to government bonds in our model portfolio,” Kolanovic said. Additionally, the strategist says his model portfolio is overweight to cash and underweight to equities, encouraging investors to stay defensive in their portfolios. “In our view, an economic recession is likely to begin in Q4 2023 to Q1 2024, and given the softening consumer sentiment, the risk reward in the stock market remains poor (new model Surplus savings due to coronavirus expected to dry up by October, resuming student loan repayments will hit $10 billion/month headwinds), investor positioning rises, and stocks’ gains so far this year A massive reassessment,” Kolanovic wrote.
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