LONDON (Reuters) - J.P.Morgan Asset Management said on Monday it had upgraded its view on UK sovereign debt to Neutral, noting the increased risk of ‘hard’ Brexit.
Writing in the fund’s third quarter asset allocation outlook, J.P.Morgan AM’s head of global multi-asset strategy John Bilton noted the Bank of England was one of the “last banks standing in the hawkish camp, despite deteriorating UK data.”
Most reckon the BOE will have to follow the example of other major central banks — U.S. Federal Reserve to the Bank of Japan and the European Central Bank — which have recently turned dovish, sending sovereign bond yields across the United States and Europe to multi-month or even record lows.
The asset manager also upgraded its view on the dollar to “neutral”, even though the Fed’s recent dovish pivot has prompted many other players to bet on more weakness in the greenback.
But Bilton said the dollar “could weaken a touch on Fed cuts, but U.S. growth differential to RoW (rest of the world) limits downside.”
J.P.Morgan Asset Management also said it now has a negative view on emerging market equities, citing a weak earnings outlook due to trade war concerns.
J.P. Morgan Multi-Asset Solutions has $255 billion of assets under management.
Reporting by Karin Strohecker; editing by Karin Strohecker