JP Morgan Asset Management (AM) has indicated in a meeting with journalists that the TIRes —the internal rates of return, that is, the expected profitability of an investment— in the fixed income market are already incorporating a scenario of global economic growth "better than expected."
"What matters to the fixed income market is whether economic growth is maintained and corporate results," declared the director of Strategy for Spain and Portugal of the firm, Lucía Gutiérrez-Mellado.
The yields of sovereign debt, especially that of the French 10-year bond and its U.S. equivalent, have recorded an increase close to 50 basis points just in September and more than 100 basis points since the beginning of 2026.
Gutiérrez-Mellado detailed that this advance is explained, in part, by the financing needs of investments by companies and governments: "The technology sector had not yet turned to the debt market," she emphasized, and now the big unknown for investors is "whether so much debt will be absorbed."
At the same time, the increase in TIRes is influenced by the rising cost of oil and by the fear that its impact on prices will lead to more persistent inflation than desired.
In this context, the manager contemplates new interest rate hikes on both sides of the Atlantic, although it considers that "the market is being too aggressive" in anticipating a more intense monetary tightening in the United States and in Europe.
"We see more increases in the United States and in Europe, but not as many as the market is discounting," stated the head of Strategy for Spain and Portugal, without specifying the number of increases they are considering in the short and medium term.
From the firm, they remind that fixed income "helps to uncorrelate from equities," except in a scenario of inflationary rebound. In that case, the executive explained, "diversification would be with alternative assets."
SOLID ECONOMIC GROWTH
For JP Morgan AM, global economic activity this year is being "quite reasonable" thanks to the good tone of corporate profits, largely driven by artificial intelligence, despite levels of indebtedness "that are concerning and causing some volatility," in addition to geopolitical tensions.
In this last area, the manager has pointed out that the war "is lasting longer than we would have liked," but believes that, if the rest of the economy remains strong, countries can withstand a barrel of crude above 100 dollars.
By geographical areas, Europe "has held up better than expected," although with a "more discreet" advance than that of the United States. In the European case, the improvement is linked to the first effects of the German fiscal plan focused on infrastructure and defense, given that manufacturing activity "is starting to pick up."
In contrast, the United States continues to exhibit a "quite significant" solidity, closely associated with the development of artificial intelligence, but also with the boost from the fiscal program launched in the country.
In relation to the 'mid-term' elections that will be held in the United States on November 3, Gutiérrez-Mellado has anticipated that in the days leading up to it, "some volatility in the markets could be recorded, but in the medium and long term, what matters is whether the economy and companies grow."
On the other hand, the entity does not rule out that China may be forced to "take measures" to support "an economy that has been dragging a significant demand problem."
DIVERSIFICATION IN PORTFOLIOS
Regarding portfolio construction, JP Morgan AM leans towards greater diversification to counteract the strong concentration of the technology sector in the indices, derived from the rise of artificial intelligence.
"We need to see if there is demand that makes profitable all the investment that the big tech companies are making. This strong growth of the technology sector has caused the indices, especially the American and those of emerging markets, to be very concentrated," said Gutiérrez-Mellado.
In light of this scenario, the manager proposes diversifying towards European equities, where the weight of technology companies is lower, and towards alternative assets. "2022 was the test; those who had alternatives in their portfolio weathered the storm better because they help to uncorrelate," the executive recalled.
Thus, the firm maintains a more constructive view on equities than on fixed income, supported by the dynamism of economic growth, and detects a greater appetite for exchange-traded funds (ETFs), a segment in which, however, they concentrate a higher weight in fixed income.