JPMorgan Asset/Gorain: Fed may cut interest rates in Q3

The Fed could cut interest rates in the third quarter as growth slows, JPMorgan Asset Management said. A U.S. recession is all but certain, and the Fed could cut interest rates in the third quarter as growth slows, according to JPMorgan Asset Management. “The market is right to write the cuts, inflation is too high and it’s going to take a recession to get it back,” said Seamus Mac Gorain, head of global rates in London, adding that U.S. banking woes “only make a recession more likely.” Mac Gorain’s views differ from those of Goldman Sachs and Barclays, which have warned that the Fed will be less aggressive in cutting rates this year than markets have predicted. JPMorgan favors Treasuries as a last resort against a slowdown and sees the potential for 10-year yields to fall below 2.5% in a deep downturn. The 10-year U.S. Treasury yield was trading around 3.56% on Wednesday after rising as high as 4.09% earlier this year. “Treasuries are still the best market,” Mac Gorain said.