According to strategists at JPMorgan Chase & Co, investors are likely to favor gold and technology stocks, as these assets are expected to provide protection against a potential US recession this year.
Long-term trading is characterized by an overweight position in gold, growth stocks such as technology companies, and currencies (short US dollar). Nikolaos Panigirtzoglou and Mika Inkinen mentioned this in their note, also highlighting that this bet is not solely based on rates due to the significantly inverted yield curve.
The US banking crisis has fueled demand for gold as a sign of lower real interest rates and as insurance against a disastrous outcome.
JPMorgan highlights that there seems to be a consensus reached on the theme of long-term trades in recent months. This type of trade appears relatively attractive, as it has limited downside potential in a moderate US recession scenario. At the same time, it offers ample opportunities for growth in a deeper recession.
Institutional investors have been flocking to gold, while retail investors have increased their bitcoin holdings in their portfolios.
Investors plan to buy investment-grade corporate bonds as a long-term investment. This is because high-rated corporate bonds typically have a higher duration of about 7-8 years, which is roughly twice as long as high-yield corporate bonds.
