JPMorgan Chase & Co.’s $1.5 trillion asset management unit is buying emerging-market and convertible bonds as it seeks higher-yielding securities with the Federal Reserve maintaining its stimulus effort.
Wall Street’s biggest firms are predicting intensifying bond losses in emerging markets, where borrowing costs have already soared to the highest in more than four years versus U.S. corporate debt, as the Federal Reserve considers curtailing record stimulus.
GFI Group Inc. , which matches securities and derivatives trades between banks, may sell notes as the lowest interest rates on investment-grade debt in at least 23 years allow companies to pare debt payments.
Strategists at JPMorgan Chase & Co. lowered their recommendation on U.S. investment-grade corporate bonds to neutral from overweight, saying that uncertainty about Europe’s fiscal crisis will limit returns for the debt.
The most relentless surge in borrowing costs for U.S. corporate debt in four years is threatening to derail this year’s record pace of sales as concern deepens the Federal Reserve will curtail unprecedented stimulus.
Bill Gross, Jeffrey Gundlach and Dan Fuss, whose firms collectively oversee about $1.5 trillion, expect the Federal Reserve to conduct a third round of bond purchases as signs of strength in the U.S. economy fade and Europe’s sovereign-debt crisis returns.