Better fixed income returns more likely since 2008: J.P. Morgan's Barry

Fixed Income Market Outlook - Higher yields are expected to persist due to elevated policy rates compared to the last 15 years, even with potential Fed rate cuts [3] - Demand for risk-free assets has shifted from central banks and foreign investors to more price-sensitive investors, potentially keeping long-term yields elevated [3] - Fixed income may offer better returns compared to the post-Global Financial Crisis (GFC) period [4] Federal Reserve Policy and Economic Impact - The Fed lowered rates by another 25 basis points and further cuts are expected this year [3] - The market perceives the Fed's reaction function as asymmetrically dovish, prioritizing the labor market over inflation [5] - The pace of private payroll growth has slowed, and the unemployment rate has slightly increased [6] - Private employment demand has been under a 1% annualized run rate for most of the year, which is unusual in modern history [7][8] Investment Strategy Implications - Increasing the fixed income component of a balanced portfolio may be advisable [2] - Fixed income can serve as a portfolio diversifier [5]