GOP bill is largely priced into U.S. Treasurys, says JPMorgan's Priya Misra

Treasury Market & Fiscal Policy - The market has largely priced in the impact of the "one big beautiful bill" (tax bill) [2][3] - Tariff revenues are projected to offset a significant portion of the tax bill's cost, with CBO projecting $28 trillion in tariff revenues versus the tax bill's $32 trillion cost [3] - The yield curve has steepened, indicating the market is pricing in an unsustainable deficit trajectory [4] - The market is pricing in some base level of tariffs, potentially 10% on the world and 30% on China or transshipment [7] Economic Outlook & Fed Policy - The underlying economy is slowing but remains above recession levels, leading to expectations of a soft landing [4][5] - Inflation has come in weaker in recent months, leading the market to price in Fed rate cuts, approximately 100 to 120 basis points [5][6] - The market anticipates "good news rate cuts" from the Fed due to the slowing economy and potential for one-time price shocks from tariffs [6] - A risk scenario involves sectoral tariffs causing mini humps or bumps in inflation, which the Fed is closely monitoring [9][10] Fixed Income Investment Strategy - In a soft landing scenario with growth around 1% to 15% and inflation slightly higher, a 4% to 45% tenure seems fair [12] - High-quality fixed income offers attractive yields around 6% to 65%, while high-quality high yield provides around 7% [12] - Fixed income looks attractive due to the potential for diversification and the likelihood of the Fed cutting rates further if the economy slows down [13]