Cash Will Be King Again in 2018, Dethroning Government Bonds

  • Global returns on deposits to outperform sovereign obligations
  • Bond investors to lose out as rate hikes loom, says JPMorgan
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Cash around the world is set to outperform government bonds from the U.S., Europe and Japan next year, posting its best return since 2012, according to JPMorgan Chase & Co.

As the Federal Reserve and Bank of England tighten the monetary screw, rates on cash deposits are likely to rise while a global basket of sovereign obligations could lose 3 percent -- marking only its fourth annual loss in over 30 years, the U.S. bank forecasts.

JPMorgan Chase & Co.

Next year’s going to be the first “since 2013 when cash outperforms bonds, and bonds generate negative returns,” strategists led by John Normand wrote in a recent note. The projected 0.5 percent return for cash next year “is still miserable, but it nonetheless improves on losses of -0.2 percent in 2016 and -0.3 percent in 2017,” they conclude.

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