From Morningstar: 2025-05-07 12:39:00

Fixed-income managers at the Morningstar Investment Conference are divided on the possibility of a US recession due to President Trump’s tariff program. Muzinich & Co’s Michael L McEachern believes the US will avoid recession, but growth will remain low. JP Morgan’s Iain Stealey says a recession is likely unless tariffs are reversed. May data will be crucial in assessing economic damage. Invesco’s Michael Matthews sees 50/50 odds of a recession.

US Treasuries are still considered safe-haven assets despite recent market turmoil, according to fixed-income managers. They doubt that Treasuries will lose their appeal, even with potential US deficit increases. UK inflation is under control, with fiscal constraints and external threats posing more concern. Invesco’s Matthews is positive on UK equities, particularly housebuilders. Investors are looking at longer-dated bonds, taking advantage of rising yields.

Corporate debt may see a slight increase in default rates due to tariffs, but fixed-income managers are not overly concerned. Companies are financially stronger and more resilient to economic slowdowns compared to previous cycles. Investors are advised to remain cautious but confident in the credit market. The authors do not have personal investments in mentioned securities.



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