JPMorgan Strategist Says Fed to Keep Cutting Rates Gradually
JPMorgan Asset Management’s Priya Misra expects U.S. monetary policy to remain on a cautious easing path as the Federal Reserve balances restrictive rates with growing pressure on the economy.
Speaking on CNBC’s Squawk Box, the fixed-income portfolio manager said she anticipates gradual rate cuts, emphasizing that policymakers will be guided by market data in determining how far to move toward a neutral stance.
Misra noted that while corporate balance sheets remain strong and the overall economic structure is sound, the combination of high borrowing costs and new customs duties is creating headwinds for growth. In her view, this environment makes diversification essential. “Fixed-income assets provide both returns and protection against a slowing economy,” she said, underscoring their role as both income generators and defensive holdings.
When it comes to bond markets, Misra highlighted medium- and long-term investment-grade corporate debt as particularly attractive. She argued that these assets can deliver stability at a time when volatility remains elevated. By contrast, she urged caution on high-yield bonds, pointing out that weaker issuers are more vulnerable in an environment of slowing growth and elevated rates.
Despite these pressures, Misra said the U.S. still looks stronger than many of its global peers. She framed the current outlook as one where investors should hedge exposures rather than exit entirely. The resilience of the American economy, she suggested, gives the Fed room to move carefully rather than aggressively.
Labor market dynamics remain a key area of uncertainty. Misra warned that tariffs and the possibility of a government shutdown could weigh on employment, which in turn could amplify downside risks to growth. These factors are likely to keep the Fed cautious, even as it trims rates.
Looking ahead, Misra expects that global investors will continue seeking exposure to U.S. fixed income, drawn by relative strength and yield opportunities. At the same time, she acknowledged that ongoing trade disputes, fiscal pressures, and political risks could inject bouts of volatility into markets. For investors, the challenge will be balancing defensive positioning with the need to capture returns in a shifting interest rate landscape.
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