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A $51 Billion Manager Says Markets Are Wrong to Cheer Fed Cuts

  • Jupiter’s Arevalo shifted portfolio to more higher-rated debt
  • Firm is becoming more defensive ahead of ‘bumpy’ second half
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Loomis Sayles' Fuss on Fed Policy, Bonds, U.S.-China Spat
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For Jupiter Asset Management Ltd.’s head of emerging-market debt strategy, the prospect of the Federal Reserve’s first interest rate cut in more than a decade is nothing to cheer about.

“The markets are wrongly reading the Fed change of policy into something positive,” said Alejandro Arevalo, who has been shifting his emerging bond portfolio towards more investment-grade debt from junk-rated securities in the past two months. “If they’re cutting rates, it’s because there’s an underlying problem with their economies. We’re becoming more defensive in what I think would be a more bumpy second half.”