Global recession 'a very low probability': JPMAM

J.P. Morgan Asset Management (JPMAM) told its 2026 Asia Summit there is a "generational amount of yield" in bond markets currently.

Speaking at the event, JPMAM chief investment officer and head of global fixed income, currency and commodities Bob Michele said investors would have to look back two or three decades to see yields at the same highs.

"If you look at passive benchmarks, they incorporate only about 40% of what's available to invest in. It's either the amount issuance, the size, where it's coming from, how it's registered, those things don't make it into benchmarks, and sometimes they offer opportunity," Michele said.

"For us, we make a lot of decisions. We think about our interest rate sensitivity. We generally do that with governments, and then we start thinking with sectors in the market that have credit make a lot of sense."

Michele said JPMAM is feeling optimistic about Canada, Japan and Australia, along with emerging markets.

"We can put together a portfolio of government bonds with very good treasuries, very good central banks, with very little dependency on cross-border flows that yield about 9% and have real yields of close to 6%. So that's going to take part of our government allocation," Michele said.

"When we start looking at sectors of the market, corporate debt looks very good to us. No one that's spoken so far has talked about recession. I'm pretty clear with the global capex cycle out there. Recession is a very low probability."

In terms of how artificial intelligence (AI) will impact economies, Michele warned investors should be careful about where funding goes.

"Those with deep pockets, a lot of free cash flow that are willing to pay to access the market make a lot of sense to us. Those that are more dependent on actually delivering and monetising demand, maybe not so much," he said.

"We look at the securitised market. It's through agency mortgages, which are mostly in the benchmarks. You can get yields of over 6% right now. They're still in US conservatorship, so they have government guarantee.

"The greater opportunity may be in securitised credit. So, think about things like credit card receivables, auto loans, and this nascent area of AI funding, you're starting to see compute being securitised through the chips and the graphics processing unit (GPU). That may make sense for us down the road... There's a lot of yield out there. You can be very choosy about how you put together your portfolio, and very careful about what the upside is."