Dollar Rally Over for JPMorgan Asset Management on Fed Pace

The Fed will only tighten to a terminal rate of about 1 percent “tops,” with the next hike coming in December, Nicholas Gartside, the London-based chief investment officer for fixed- income at JPMorgan Asset Management said in an interview in Tokyo last week. That “glacial” pace of policy tightening means that the dollar’s world-beating rally since mid-August is over, and the benchmark Treasury 10-year yield is likely to head toward 1.5 percent over the coming year, he said, from around 1.76 percent as of 7 a.m. in London Tuesday.

“If you think what the supports for the dollar were, they were that U.S. growth was stronger, and the Federal Reserve was going to be a lot more aggressive,” Gartside said on Oct. 20 at JPMorgan’s Tokyo office. “The growth differential has disappeared, and you’ve not really got a big difference any more in terms of central bank policies diverging. Add that together and it’s tricky to argue that the dollar should be stronger.”