The inverted yield curve should normalize again next year, J.P. Morgan Asset Management said.
Central banks will respond to the expected slowdown in economic demand and in inflation with sharp interest rate cuts, it added.
“Yields at the short end of the curve are therefore likely to fall below yields at the long end over the course of the [next] year.”
J.P. Morgan Asset Management also said investors aiming to protect their investments against weak economic growth or even a recession next year should consider relying on the safety of long-term bonds with a high credit rating.
“Investors who have secured the currently attractive interest rates for their portfolio, benefit from bond yields falling in a disinflationary recession scenario.”