A bank executive in America believes corporate bonds will survive the recent crisis in the banking sector.
Investment-grade credit may provide returns “in a world where growth is slow and earnings in the US are unclear,” according to Jed Laskowitz, chief investment officer at J.P. Morgan Asset Management, in an interview with Bloomberg News published on Tuesday (March 28).
While there is still more to be done in the banking industry, according to Laskowitz, the swift regulatory reaction this month will prevent contagion. Even though the Federal Reserve recently signaled that its tightening was about to come to an end, he claimed that there is still a risk of a rough landing for the US economy.
According to Laskowitz, “those risks, for the time being, are not sufficient for us to take a big underweight position in stocks.”
“It’s critical to not pass up possibilities. There is a chance that the Fed’s tightening and a longer recession may result in a long decline in profits. But we haven’t arrived yet.
The benchmark interest rate of the Federal Reserve was increased by 0.25% last week. Although there might not be any further rate increases in the near future, some of Chairman Jerome Powell’s comments indicate a more challenging environment for both businesses and consumers.
At a press conference, Powell stated that “financial conditions seem to have tightened, and perhaps by more than the standard indices suggest.”
