Bloomberg Surveillance Markets Welcome Tariff Negotiations amid Uncertainty
Apr 25, 2025
Bob Michele, CIO of Fixed Income at JPMorgan Asset Management, shares insights on the bond market and the expected impact of Fed policies. Tim Adams, CEO of the Institute of International Finance, discusses his talks with the US Treasury regarding the IMF's critical roles. Meghan Graper, Global Head of Debt Capital Markets at Barclays Capital, highlights the brighter side of uncertainty in investment-grade credit amid possible trade deals with China. Together, they explore the intricate dynamics of global finance and the evolving landscape of economic policy.
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Why Bond Markets Remain Calm
- The bond market calmed as leverage was forced out and false narratives about foreign selling were disproven.
- Fed officials acknowledged a dual mandate and administration openness to talks also helped ease turmoil.
Bond Market Warns of Recession
- The bond market signals a likely recession if tariffs proceed as planned.
- One-time inflation shocks will reduce demand and lead to recessionary pressures before easing inflation.
Prefer High-Quality Credit Risk
- Investors should favor high-quality credit over low quality amid uncertainty.
- Debt of companies owned in equity portfolios is less risky than equity itself.