A bank official in the United States believes corporate bonds will survive the recent banking crisis.
According to Jed Laskowitz, chief investment officer at J.P. Morgan Asset Management, in an interview with Bloomberg News published on Tuesday, investment-grade credit may generate returns “in a world where growth is weak and earnings in the US are uncertain” (March 28).
While there is still work to be done in the banking industry, Laskowitz believes that the quick regulatory response this month will prevent contagion. Even if the Federal Reserve recently hinted that its tightening was likely to finish, he stated that the US economy is still at risk of a hard landing.
“Those dangers, for the time being,” says Laskowitz, “are not sufficient for us to take a large underweight position in stocks.”
“It’s vital not to pass up opportunities.” There is a possibility that Fed tightening and a protracted recession may result in a long decrease in earnings. But we haven’t yet arrived.
The Federal Reserve’s benchmark interest rate was raised by 0.25% last week. Although no more rate rises are expected in the foreseeable future, some of Chairman Jerome Powell’s words suggest a more difficult climate for both firms and consumers.
Powell noted at a news conference that “financial conditions appear to have tightened, and maybe by more than the usual indexes show.”
